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Outline, using appropriate figures, how the Irish economy has performed, in the past twelve months, in each of the following areas: (i) Price levels; (ii) Economic growth; (iii) Government current budgetary position; (iv) Employment/unemployment. - Leaving Cert Economics - Question 8 - 2010
Question 8
Outline, using appropriate figures, how the Irish economy has performed, in the past twelve months, in each of the following areas: (i) Price levels; (ii) Economic ... show full transcript
Worked Solution & Example Answer:Outline, using appropriate figures, how the Irish economy has performed, in the past twelve months, in each of the following areas: (i) Price levels; (ii) Economic growth; (iii) Government current budgetary position; (iv) Employment/unemployment. - Leaving Cert Economics - Question 8 - 2010
Step 1
(i) Price levels;
Answer
In the past twelve months, price levels in Ireland have experienced a decline partly due to weakening foreign and domestic demand. Significant price drops have been observed in clothing and footwear, food and non-alcoholic beverages. For example, the cost of household equipment has also decreased, with prices in areas like transport costs, water, electricity, gas, and other fuels dropping by approximately 3.7%. As of May 2010, price levels were on average 6.1% lower than the previous year, with deflation peaking at 6.6% in October 2009 before showing signs of stability.
Step 2
(ii) Economic growth;
Answer
The Gross Domestic Product (GDP) of Ireland faced a decline of 7.2% in 2009, and it is projected to drop further by 1.1% in 2010, according to the Economic and Social Research Institute (ESRI). GNP has decreased by 12%, and the overall economic activity is characterized as 'very modest' in the second half of 2010, largely influenced by the ongoing worldwide economic recession.
Step 3
(iii) Government current budgetary position;
Answer
The Irish government has made significant cutbacks in its current expenditures due to deteriorating financial conditions. These measures were initiated in December 2009, with an announcement of cuts amounting to €4 billion in public sector pay and social welfare. Revenue from taxation has continued to decline, which has resulted in a lack of consumer spending. The budget deficit was initially €11.4 billion in 2009 and is projected to increase to €13.6 billion in 2010, with the estimated budgetary revenue (EBR) at €24.7 billion in 2009, anticipated to be €18.6 billion in 2010.
Step 4
(iv) Employment/unemployment.
Answer
As of May 2010, the number of people signing on to the Live Register increased by 6,600, bringing the unemployment rate to 13.7%. The total number of people on the Live Register was 439,100. Ireland's unemployment rate is 3.1% higher than the EU average, where the average unemployment rate stands at 1.9%. Additionally, the total number of people employed is 1.911 million, reflecting the ongoing challenges posed by the recession.