Ch 23. Ireland & the Global Economy

Question 1

International trade

Answer 1

The importing and exporting of different products between countries

Question 2

An open economy

Answer 2

An economy that engages in international trade

Question 3

Imports

Answer 3

Goods/services bought from other countries

Visible or invisible

Question 4

Visible imports

Answer 4

Physical goods e.g. cars, books and computers

Question 5

Invisible imports

Answer 5

Services e.g. banking, insurance and tourism

Provided to Irish consumers by foreign firms

Question 6

Exports

Answer 6

Goods/services sold by Irish firms to customers in other countries
Visible or invisible

Question 7

Visible exports

Answer 7

Physical goods e.g. food and pharmaceuticals

Question 8

Invisible exports

Answer 8

Services e.g. financial services, selling holidays in Ireland to foreign tourists

Question 9

Balance of Payments

Answer 9

All the flows of money into and out of a country in a year

Question 10

Balance of payments surplus

Answer 10

A country earning more than its spending internationally

Question 11

Balance of payments deficit

Answer 11

A country paying out more than its earning

Question 12

Balance of trade

Answer 12

The difference between all visible and invisible imports into and all visible and invisible exports out of a country

Question 13

Free trade

Answer 13

When trade between countries is nit restricted in any way by barriers e.g tariffs or quotas

Question 14

Benefits of free trade for business (3)

Answer 14

• Importing raw materials not available in Ireland
• Increase sales and profits through exporting
• Spreads business risk - exporting reduces reliance on sales in a single country.

Question 15

Benefits of free trade for consumers (2)

Answer 15

• Imports give a wider choice of goods

- Quality - domestic firms ensuring products match or exceed quality of imports

Question 16

Benefits of free trade for the economy (3)

Answer 16

• Successful exporting generates jobs
• Foreign exchange earnings from exports to pay for imports
• Encourages communication, understanding and co-operation between countries

Question 17

Protectionism

Answer 17

Barriers imposed by governments to prevent free trade

Question 18

Reasons for protectionism

Answer 18

• Business growth
• Business survival
• Protect employment
• Improve balance of payments

Question 19

Tariffs

Answer 19

Taxes put on imported goods

Question 20

Quotas

Answer 20

A limit on the quantity of certain goods that can be imported

Question 21

Embargoes

Answer 21

Bans preventing the importation or export of specified goods

Question 22

Subsidies

Answer 22

Money paid by governments to help firms cover their operating costs and keep their prices competitive.

Question 23

Main trends in international trade

Answer 23

• Increasing power and influence of TNC’s
• Emergence of trading blocs
• Deregulation
• Increasing power of the WTO

Question 24

Trading bloc

Answer 24

• A group of countries that agree to remove protectionist barriers to free trade between themselves.
• However, they impose tariffs and other protectionist barriers on all imports coming from countries that are not members of the bloc.

Question 25

TNC

Answer 25

Firms that produce and market goods in more than one country, e.g. Unilever, Microsoft and McDonald's

Question 26

Deregulation

Answer 26

The removal of government rules and regulations from the workings of business, including the ability to trade freely without any protectionist barriers.

Question 27

WTO

Answer 27

- Responsible for setting the rules of international trade among its 150 member countries. - It does this by organising negotiations between member countries to reduce protectionism and allow free trade.

Question 28

Opportunities for Irish businesses in international trade (4)

Answer 28

- EU membership - Euro currency - Low corporation taxes - Government assistance

Question 29

EU membership offers (3)

Answer 29

- Free access to a huge market - Opportunity to develop economies of scale - Attracts non-EU companies

Question 30

Euro currency offers (1)

Answer 30

- Makes trade easy within eurozone

Question 31

Low corporation taxes offer (1)

Answer 31

- Attracts foreign firms

Question 32

Government assistance offers (3)

Answer 32

- Grants, training and advice to business - Reduces cost and risk to TNC's locating - IDA Ireland

Question 33

Trade missions

Answer 33

When a group of business people visit a foreign country to meet with potential customers and distributors and to negotiate deals and sales.

Question 34

Challenges for Irish business in international trade (4)

Answer 34

- High costs - Competition - Lack of economies of scale - Exchange rates

Question 35

High costs challenges for Ireland (2)

Answer 35

- On the edge of Europe, higher transport costs | - High labour costs

Question 36

Competition challenges for Ireland (3)

Answer 36

- Small by international standards - Have to target niche markets - Have to compete using superior design, quality etc. rather than price

Question 37

Lack of Economies of Scale challenges for Ireland (3)

Answer 37

- Small Irish market - Difficult to develop economies of scale and compete - Concentrate on niche markets where price isn't important.

Question 38

Exchange Rates challenges for Ireland (1)

Answer 38

- Fluctuations in exchange rates for different currencies currencies causes difficulties.