Chapter 17 - Foreign Trade☀️

Question 1

What is importing?

Answer 1

The purchase of goods and services from other countries for sale in Ireland (money leaves Ireland).

Question 2

What is exporting?

Answer 2

When Irish goods and services are sold to other countries (money comes into Ireland).

Question 3

What are visible imports?

Answer 3

The purchase of physical goods from another country e.g. Ireland buying tea from Sri Lanka

Question 4

What are invisible imports?

Answer 4

The purchase of services from another country e.g. Irish person holidaying in France.

Question 5

What are visible exports?

Answer 5

The sale of physical goods to another country e.g. Ireland selling beef to Britain.

Question 6

What re invisible exports?

Answer 6

The sale of services to another country e.g. The Irish band Westlife performing a concert in Germany.

Question 7

What is import substitution?

Answer 7

The purchase of Irish made goods instead of foreign imports e.g. Buying Tayto crisps instead of Walkers crisps.

Question 8

What are the reasons for importing?

Answer 8

1. Ireland does not have certain natural resources that are necessary for everyday living e.g. Such as oil
2. The Irish climate doesn’t suit the production of items such as oranges, tea, cotton and rice. We therefore need to buy these goods from other countries.
3. Irish people like a range of goods e.g. iPod, iPad, many of which are not made in Ireland, so they must be imported.

Question 9

What is foreign trade?

Answer 9

Foreign trade occurs when Ireland buys goods and services from other countries or sells goods and services to other countries.

Question 10

What are the reasons for exporting?

Answer 10

1. Some able to produce large quantities of food products because their land or climate is unsuitable e.g. Potatoes
2. Some goods can only be manufactured in some places because the skills and traditions are only available there e.g. Aran Jumpers
3. As Ireland is very small, the Irish market is too small, and Irish firms need to export their goods to make a profit.

Question 11

What are the difficulties with foreign trade?

Answer 11

1. Foreign Currency: Increased costs due to commission charges and exchange rates changes
2. Language: They will have to deal with a different language when selling goods to some countries and may have to redesign packaging.

Question 12

What is the states involvement in exporting?

Answer 12

The organisation Enterprise Ireland assists Irish exports by:
1. Providing information on foreign markets, shipping and transports
2. Organises trade fairs and exhibitions abroad
Other organisations are:
Tourism Ireland and Bord Bia

Question 13

What is the balance of trade?

Answer 13

The difference between a country's visible exports and visible imports
Balance of Trade Surplus 
- Visible Exports > Visible Imports
Balance of Trade Deficit
- Visible Exports

Question 14

What is the balance of payments?

Answer 14

The balance of payments can be determined by comparing a country's total imports and total exports
Balance of Trade Surplus
- Total Exports > Total Imports 
Balance of Trade Deficit
- Total Exports

Question 15

How do you calculate the Balance of Trade?

Answer 15

Subtract the visible imports from the visible exports e.g.

V.E - V.I. = B.O.T.

Question 16

How do you calculate the Balance of Payments?

Answer 16

Subtracting the total imports from the total exports e.g.
V.E. + I.E. = 2630
V.I. + I.I. = 2450
2630 - 2450 = B.O.P.