Photo AI
Outline two possible economic effects for the Irish economy of the euro (€) falling in value relative to the US dollar ($) - Leaving Cert Economics - Question 6 - 2011
Question 6
Outline two possible economic effects for the Irish economy of the euro (€) falling in value relative to the US dollar ($). (i) (ii)
Worked Solution & Example Answer:Outline two possible economic effects for the Irish economy of the euro (€) falling in value relative to the US dollar ($) - Leaving Cert Economics - Question 6 - 2011
Step 1
(i) Import prices (from US) dearer
Answer
When the euro falls in value against the US dollar, the price of imports from the US will rise. This leads to a higher import bill for Irish consumers and businesses, making it more expensive to purchase goods from the US. Consequently, this can strain budgets and reduce overall consumption in the economy.
Step 2
(ii) Export prices (to US) cheaper
Answer
The depreciation of the euro makes Irish goods cheaper for US customers, potentially increasing exports from Ireland to the US. This can lead to greater sales and market share in the US, positively impacting the Irish economy by boosting production and encouraging further investment in export-oriented sectors.