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Explain any three of the following terms: - Open economy - Exchange rate - Economic growth - Tariffs - Leaving Cert Economics - Question 4 - 2019
Question 4
Explain any three of the following terms: - Open economy - Exchange rate - Economic growth - Tariffs. Irish rugby supporters will travel to Japan for the Rugby Wor... show full transcript
Worked Solution & Example Answer:Explain any three of the following terms: - Open economy - Exchange rate - Economic growth - Tariffs - Leaving Cert Economics - Question 4 - 2019
Step 1
Explain any three of the following terms: Open economy
Answer
An open economy is one that engages in international trade, meaning it imports and exports goods and services. This allows for a greater variety of products available to consumers, facilitates competition and can lead to improved efficiency and innovation within domestic markets.
Step 2
Explain any three of the following terms: Exchange rate
Answer
The exchange rate is the value of one currency expressed in terms of another currency. It plays a crucial role in determining the cost of imports and exports. A stronger currency makes imports cheaper and exports more expensive, while a weaker currency does the opposite.
Step 3
Explain any three of the following terms: Economic growth
Answer
Economic growth refers to the increase in a country’s GNP or GDP over a period of time. It reflects the rise in the production of goods and services, leading to a higher national income and improved living standards. It is essential for sustainable development and employment opportunities.
Step 4
Is this an example of an invisible import or an invisible export for the Irish economy? Explain your answer.
Answer
This is an example of an invisible import because the money spent by Irish rugby supporters in Japan represents an outflow of funds from the Irish economy. Unlike physical goods, this transaction does not involve the exchange of tangible products.
Step 5
Explain what a surplus in Ireland's Balance of Trade means.
Answer
A surplus in Ireland's Balance of Trade means that the total value of exports of goods and services exceeds the total value of imports. This situation indicates that the country is earning more from its exports than it is spending on imports, potentially contributing positively to its economy.
Step 6
Outline two economic advantages of international trade for the Irish economy.
Answer
- Employment creation: Increased demand for goods produced in Ireland leads to job opportunities both in manufacturing and distribution sectors.
- Increased GNP / Economic growth: Revenues generated from exports contribute to the country's GNP, which can then be reinvested into the economy, further fueling growth.