a) Illustrate what is meant by the term 'invisible imports', with reference to the Irish economy. Invisible imports are foreign services purchased by Irish customers/residents. For instance, this may include financial services provided by foreign firms to Irish residents holding abroad. b) Using the following data, calculate (i) Balance of Trade, (ii) Balance of Payments. State in each case whether it is a surplus or deficit. (Show your workings.) Visible Exports €50bn Invisible Imports €40bn Visible Imports €30bn Invisible Exports €35bn ANSWER BOX (i) Balance of Trade € Surplus OR Deficit (ii) Balance of Payments € Surplus OR Deficit

Leaving Cert Business International Trade: a) Illustrate what is meant by t

a) Illustrate what is meant by the term 'invisible imports', with reference to the Irish economy - Leaving Cert Business - Question 5 - 2023

Question 5

a) Illustrate what is meant by the term 'invisible imports', with reference to the Irish economy. Invisible imports are foreign services purchased by Irish customer... show full transcript

Worked Solution & Example Answer:a) Illustrate what is meant by the term 'invisible imports', with reference to the Irish economy - Leaving Cert Business - Question 5 - 2023

Step 1

(i) Balance of Trade

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Answer

To calculate the Balance of Trade, we use the formula:

$\text{Balance of Trade} = \text{Visible Exports} - \text{Visible Imports}$

Substituting the values:

$\text{Balance of Trade} = €50\text{bn} - €30\text{bn} = €20\text{bn}$

Thus, the Balance of Trade is €20bn surplus.

Step 2

(ii) Balance of Payments

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To calculate the Balance of Payments, we use the formula:

$\text{Balance of Payments} = \text{Balance of Trade} + \text{Balance of Invisible Trade}$

First, we need to calculate the Balance of Invisible Trade:

$\text{Balance of Invisible Trade} = \text{Invisible Exports} - \text{Invisible Imports}$

Substituting the values:

$\text{Balance of Invisible Trade} = €35\text{bn} - €40\text{bn} = -€5\text{bn}$

Now, substituting into the Balance of Payments formula:

$\text{Balance of Payments} = €20\text{bn} + (-€5\text{bn}) = €15\text{bn}$

Thus, the Balance of Payments is €15bn surplus.

a) Illustrate what is meant by the term 'invisible imports', with reference to the Irish economy - Leaving Cert Business - Question 5 - 2023

Worked Solution & Example Answer:a) Illustrate what is meant by the term 'invisible imports', with reference to the Irish economy - Leaving Cert Business - Question 5 - 2023

(i) Balance of Trade

(ii) Balance of Payments

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