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Wage levels have fallen in both the public sector and the private sector in Ireland - Leaving Cert Economics - Question b - 2011
Question b
Wage levels have fallen in both the public sector and the private sector in Ireland. (i) Explain each of the underlined terms and state one example of an occupation... show full transcript
Worked Solution & Example Answer:Wage levels have fallen in both the public sector and the private sector in Ireland - Leaving Cert Economics - Question b - 2011
Step 1
Explain each of the underlined terms and state one example of an occupation in each.
Answer
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Public Sector:
- Definition: This sector consists of organizations owned and operated by the government to provide services to its citizens. It is funded through taxation and aims at serving the public interest.
- Example Occupation: A teacher, who works in public schools funded by the government.
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Private Sector:
- Definition: This sector comprises businesses that are owned by private individuals or groups. These organizations focus on profit generation and operate independently of government control.
- Example Occupation: A shop worker who is employed in a retail business owned by a private individual.
Step 2
Discuss two economic effects which falling wage levels may have on each of the following: Businesses;
Answer
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Reduced Costs / Lower Prices: With the falling wage levels, businesses may experience lower costs of production. This reduction can make a business more competitive, leading to decreased prices for consumers, which could increase demand for their products.
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Continuity of Production: Lower labor costs may permit businesses to hire additional workers or retain their current workforce. This continuity is essential for maintaining production levels, especially during periods of economic uncertainty.
Step 3
Discuss two economic effects which falling wage levels may have on each of the following: Government finances.
Answer
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Reduced Tax Revenue: As wages fall, individuals will have a lower disposable income, resulting in decreased income tax revenue for the government. This reduction can affect government funding for public services.
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Increased Social Welfare Payments: With lower wages, more individuals may be eligible for social welfare benefits. This situation could put additional pressure on government finances as they would need to allocate more resources to support those in need.