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Discuss the possible economic effects which the following proposals, if implemented, could have on the Irish economy - Leaving Cert Economics - Question c - 2010
Question c
Discuss the possible economic effects which the following proposals, if implemented, could have on the Irish economy. (i) Introduction of third level college fees; ... show full transcript
Worked Solution & Example Answer:Discuss the possible economic effects which the following proposals, if implemented, could have on the Irish economy - Leaving Cert Economics - Question c - 2010
Step 1
Introduction of third level college fees
Answer
The introduction of third level college fees can have several economic effects on the Irish economy:
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Reduction in Disposable Income: Families will need to pay these fees, which may reduce their disposable income. This could lead to decreased consumer spending in other sectors, affecting overall economic growth.
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Increased Government Revenue: The government will benefit from additional revenue through these fees, allowing for increased public spending or investment in educational initiatives. This can help enhance the educational infrastructure.
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Access and Equity Issues: Higher fees may limit access to higher education for lower-income families, potentially leading to a less qualified workforce in the long run.
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Opportunity Cost for Families: Families may divert funds to pay for college fees, impacting their ability to invest in other areas, such as housing or savings.
Step 2
Increase in the statutory retirement age from 65 to 68 years
Answer
Increasing the statutory retirement age can also lead to various economic implications:
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Extended Workforce Participation: This change means that individuals will remain in the workforce for an additional three years, thus increasing overall productivity and economic output. It can help alleviate labor shortages in certain sectors.
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Pension Funding Relief: Delay in retirement can relieve pressure on pension systems, reducing governmental spending on pensions and potentially leading to a more sustainable pension model.
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Impact on Job Market: However, this may also create challenges for younger job seekers, as older workers delaying retirement could lead to increased competition for available positions.
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Health and Well-being Considerations: Older workers may face health challenges that can impact their productivity, and this could require additional support from employers.
Step 3
Introduction of a household property tax
Answer
The implementation of a household property tax can have significant effects on the economy:
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Increased Tax Revenue: A household property tax would generate additional revenue for the government, which could be allocated to essential services such as infrastructure, education, and healthcare.
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Economic Behavior Change: This tax may influence individuals' decisions regarding home ownership and investment in property. It could discourage excessive property speculation and promote more sustainable housing markets.
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Potential for Displacement: However, increased costs related to property tax may lead to challenges for low-income families and could result in displacement if households are unable to afford the additional expense.
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Impact on the Rental Market: Property taxes can also impact rental prices, as landlords may pass on the costs to tenants, potentially leading to higher living costs.