Economics 3

Question 1

Explain import

Answer 1

Any good or service purchased by the residents of a country that causes money to go out of the country.

Question 2

Explain export

Answer 2

Good or service provided by the residents of a country that causes money to come into the country

Question 3

Explain visible exports

Answer 3

Physical products produced by the residents of a country that causes money to come into the country when sold
Ex. Alcohol
Medicine

Question 4

Explain foreign trade

Answer 4

Selling goods and services to and buying goods and services from other countries

Question 5

Explain visible imports

Answer 5

Physical goods purchased by the residents of a country that cause money to go out of he country ex. Ireland car or tv

Question 6

Explain invisible exports

Answer 6

Services provided by residents of a country that cause money to come into the country ex. Incoming tourists coming to Ireland and sale of financial services abroad

Question 7

Explain invisible imports

Answer 7

Services purchased but the residents of a country that cause money to go out of the country. Ex: Outgoing tourists and foreign pop groups that perform in Ireland

Question 8

Explain the balance of parents and what it is made up of

Answer 8

The balance of payments is a record of a country economic transactions with the rest of the world

Made up of:
Balance of trade
Balance on the current account
The capital account

Question 9

Explain the balance of trade

Answer 9

The balance of trade is the difference between the visible imports and exports only. Exports-imports

Question 10

Explain how to get the balance on the current account or balance of payments

Answer 10

This is the balance of trade plus or minus the difference between the value of invisible exports and imports (sometimes, called balance of payments)

Question 11

Give reasons that countries import goods

Answer 11

To obtain raw materials not available in their own country if needed by domestic industries

To obtain capital goods (ex. Machinery) not available in their own country if needed by domestic industries

To obtain consumer goods that cannot be made or cannot be made at a reasonable price, in their own countries

Question 12

Give some reasons that countries export goods

Answer 12

Countries export to earn money from abroad to pay for their imports

In order to create employment in their own countries that would not otherwise be created

Countries export in order to sell off their surplus production selling the surplus goods abroad earns extra income for these countries

Question 13

How to get euro into foreign currency (formula)

Answer 13

€x we sell rate

Question 14

Formula to turn foreign currency into euro

Answer 14

Foreign currency x we buy rate =€

Question 15

Explain import substitution

Answer 15

Buy Irish goods instead of importing foreign goods

Question 16

Give problems facing Irish firms in international trade

Answer 16

Language differences makes communication difficult

Transport costs are big in Ireland as we are an island and spend on sea,air,road and rail transport.

Insurance costs high because we often have to transport which increases insurance costs

Different countries have different minimum standards production and different specifications for products

Currency change in value on a day to day basis