Consumer prices fell at an annual rate of 6.6% in October 2009, according to figures issued by the CSO - Leaving Cert Economics - Question 7 - 2010

The economic term used for the situation underlined above is 'Deflation', which refers to a decrease in the general price level of goods and services.

People in receipt of social welfare may benefit from deflation as the cost of living decreases, allowing their payments to stretch further. However, if the government reduces payments to adjust to lower costs, it could negate these benefits.

Savers may find that the real interest rates on their accounts increase during deflation, as the value of their savings grows. However, if deflation leads to a prolonged recession, general uncertainty might cause savers to hold back on spending.

Employees may face challenges as deflation can lead businesses to cut wages or lay off workers to reduce costs, potentially increasing unemployment rates. Additionally, reduced consumer spending can lead to lower business revenues and further job losses.

The term 'Savings' refers to the portion of income that is not spent on immediate consumption and is instead set aside for future use.

One reason for the increase in savings is cautious consumer behavior, where individuals are opting to save more in response to economic uncertainty and potential future financial hardships.

1. Help create jobs / prevent job losses: Increased consumer spending drives demand for goods and services, leading to higher production levels, which can help businesses retain or create jobs.

2. Stimulate economic growth: Boosting consumer spending can lead to increased overall economic activity, allowing businesses to invest in expansion and development, thereby enhancing economic growth.

The term 'black economy' refers to economic activity that is not reported to the government and is not included in the national income accounts. An example of such an activity is informal labor, such as a person providing gardening services without reporting their income.

1. High price of cigarettes in Ireland: The high taxation and retail prices of cigarettes incentivize individuals to smuggle them into the country to sell at lower prices.

2. Inadequate security measures: Weak enforcement at borders allows smugglers to transport illegal goods more easily, increasing their profitability.

1. Decline in legitimate business activity: Businesses that sell cigarettes legally may suffer a decline in sales as consumers shift to smuggled products, affecting local tax revenues.

2. Increased enforcement costs: The government may need to allocate more resources toward combating smuggling activities, which could strain public finances and divert funds from essential services.