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In December 2013 the WTO reached agreement with member countries in relation to reducing barriers to free trade - Leaving Cert Economics - Question 7 - 2014
Question 7
In December 2013 the WTO reached agreement with member countries in relation to reducing barriers to free trade. (i) What do the initials WTO stand for? (ii) Defin... show full transcript
Worked Solution & Example Answer:In December 2013 the WTO reached agreement with member countries in relation to reducing barriers to free trade - Leaving Cert Economics - Question 7 - 2014
Step 1
Step 2
Define each of the following barriers to free trade: tariffs and quotas.
Answer
Tariffs
Tariffs refer to a tax on imported goods which raises their prices and limits competition from foreign products.
Quotas
Quotas are restrictions on the quantity of a particular good that can be imported into a country, thereby regulating and limiting supply.
Step 3
Discuss two reasons why some countries impose barriers to free trade.
Answer
Countries may impose barriers to free trade for several reasons:
Protect Domestic Industries
New industries might face intense competition from established foreign firms. By imposing tariffs or quotas, a country can protect its emerging sectors from foreign competition, allowing them time to develop.
Protect Employment
Foreign competition may threaten local jobs. By limiting imports, a government can help safeguard job opportunities for its citizens.
Step 4
Step 5
Outline two benefits for the Irish economy of increased exports.
Answer
Increased Employment
Higher levels of exports generally lead to increased demand for goods produced within Ireland, resulting in higher employment rates as businesses expand production to meet international demand.
Economic Growth
Increased exports contribute to the nation's economic growth by generating higher national income, which can improve public services and infrastructure.
Step 6
State and explain two factors which could make Irish exports more competitive.
Answer
Value of the Euro
If the value of the Euro decreases against other currencies, Irish goods become cheaper for foreign buyers, increasing demand and competitiveness.
Production Costs
Efficiency in production methods can lower costs. If Irish producers can maintain lower costs without compromising quality, their exports can be more competitive.
Step 8
Discuss three economic effects for the Irish economy of more countries joining the EU.
Answer
Larger Market
Increased membership in the EU provides Irish firms with a broader customer base for their goods and services, enhancing sales opportunities.
Investment Opportunities
Welcoming new member states can attract foreign investments into Ireland, as businesses look to expand their operations in a stable economic environment.
Increased Competition
While the influx of new members can lead to stronger competition in various sectors, this can also lead to improvements in efficiency and productivity among Irish firms as they strive to stay competitive.