Outline two possible economic effects of UK Sterling (£) falling in value relative to the Euro (€) for the Irish economy - Leaving Cert Economics - Question 6 - 2009
Question 6
Outline two possible economic effects of UK Sterling (£) falling in value relative to the Euro (€) for the Irish economy.
(i)
(ii)
Worked Solution & Example Answer:Outline two possible economic effects of UK Sterling (£) falling in value relative to the Euro (€) for the Irish economy - Leaving Cert Economics - Question 6 - 2009
Step 1
Import Prices Cheaper
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Answer
The decrease in UK Sterling's value leads to lower import prices for goods from the UK. As a result, Irish consumers and businesses may benefit from cheaper products, which can increase consumption and potentially stimulate the local economy.
Step 2
Exports Prices Dearer
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Answer
The falling value of the Sterling makes Irish exports to the UK more expensive. This could result in a decline in demand for Irish goods in the UK market, negatively affecting Irish producers who rely on exports, leading to job losses and reduced income in those sectors.
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