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Explain the term ‘invisible exports’: Invisible exports refer to the part of international trade that involves the sale of services rather than physical goods - Leaving Cert Business - Question 10 - 2006
Question 10
Explain the term ‘invisible exports’: Invisible exports refer to the part of international trade that involves the sale of services rather than physical goods. This... show full transcript
Worked Solution & Example Answer:Explain the term ‘invisible exports’: Invisible exports refer to the part of international trade that involves the sale of services rather than physical goods - Leaving Cert Business - Question 10 - 2006
Step 1
Explain the term 'invisible exports':
Answer
Invisible exports refer to the part of international trade that involves the sale of services rather than physical goods. This includes services provided by a country to foreign entities, such as insurance, banking, transport, and tourism. Unlike visible exports, which can be quantified in terms of tangible goods, invisible exports highlight the importance of service-based economic activities in generating revenue from abroad.
Step 2
(i) Balance of Trade:
Answer
To calculate the Balance of Trade, we subtract the value of visible imports (VI) from the value of visible exports (VE). Given that:
- Total Exports = €19 billion (includes visible and invisible exports)
- Invisible Exports = €11 billion
First, we can find the visible exports:
Visible Exports (VE) = Total Exports - Invisible Exports = €19 billion - €11 billion = €8 billion
Now, according to the marking scheme:
Balance of Trade = VE - VI = €8 billion - €16 billion = -€8 billion
Step 3
(ii) Balance of Payments:
Answer
The Balance of Payments is calculated by subtracting total imports (TI) from total exports (TE). Given:
- Total Exports (TE) = €19 billion
- Total Imports (TI) = €16 billion
The calculation is as follows:
Balance of Payments = TE - TI = €19 billion - €16 billion = €3 billion