Foreign Trade Chapter 17

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 is Visible Imports

Answer 3

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

Question 4

What is Invisible Imports

Answer 4

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

Question 5

What is Visible Exports

Answer 5

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

Question 6

What is Invisible Exports

Answer 6

The sale of services to another country e.g The Irish band West Life performing in Germany.

Question 7

What is Importing 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, timber and coal.
2) the Irish climate doesn’t suit the production of items such as oranges, tea cotton or rice. We therefore need to buy these goods from other countries.
3) Irish people like a range of goods e.g iPod, iPad, many which are not made in Ireland, so they must be imported.

Question 9

What are the reasons for Exporting

Answer 9

1) Some countries are not 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 Ireland because the skills and traditions needed are only available in Ireland e.g Aran Knitwear
3) As Ireland is a very small island, the Irish market is too small, and such Irish firms need to export their goods/services to make profit.

Question 10

What are the difficulties associated with foreign trade

Answer 10

1) Transport
2) Foreign Currency
3) Damage
4) Language
5) Documents

Question 11

Explain Foreign Currency

Answer 11

~ Increased costs due to commission charges and exchange rates.

Question 12

Explain Language

Answer 12

~ They will have to deal with a different language when selling goods to some countries and may have to redesign packaging.

Question 13

What are the Main Trading Partners

Answer 13

🔶 Ireland imports and exports most goods and services from Britain and Northern Ireland.

🔶 Principal sources of imports
- UK, USA, Germany, Japan, France

🔶 Principal sources of exports
- UK, USA, Germany, France.

Question 14

What is the State Involvement in Exporting

Answer 14

The state organisation Enterprise Ireland assists Irish exports in the following ways
~ Provides information on foreign markets, shipping and transport.
~ Organises trade fairs and exhibitions abroad.
~ Arranges meetings with foreign buyers.

Question 15

What are the Other organisations which promote Irish exports

Answer 15

• Bord Bia
• Tourism Ireland
• IDA ( Industrial Development Authority )

Question 16

What is the balance of trade

Answer 16

~ The balance of trade is the difference between a country’s visible imports and visible exports.

~ Balance of trade surplus
- total exports > total imports

~ Balance of trade deficit
- total exports

Question 17

What is the Balance of Payments

Answer 17

🔹 The Balance of Payments (on current account ) can be determined by comparing a country’s visible and invisible imports (Total Imports) to the visible and invisible exports (Total Exports )

🔹 Balance of payments surplus
- Total Exports > Total Imports

🔹 Balance of Payments deficit
- Total Exports

Question 18

What is the benefits of EU Membership to Ireland

Answer 18

🔶 Irish firms can sell their products/ services in a huge market and this has increased their sales and profits.

🔶 Irish people can travel or work in any EU member state (freedom of movement within the EU)

Question 19

What is restricted trade

Answer 19

As a member of the EU, Ireland engages in free trade with other EU states. However, Ireland and the EU can restrict trade with other countries in several ways, including:

• Customs Duties
• Taxes on imports that make them more expensive and less competitive
• Quotas
• A limit on the quantity of goods that are allowed to be Imported
• Embargo
• A total ban on the import of certain goods from a certain country
• Subsidies (Grants)
• Given to exporters to assist them in selling their products more cheaply.

Question 20

What is the currency of United States of America

Answer 20

American dollar

Question 21

What is the currency of Australia

Answer 21

Australian dollar

Question 22

What is the currency of Japan

Answer 22

Japanese Yen

Question 23

What is the currency of South Africa

Answer 23

South African Rand

Question 24

What is the currency of Russia

Answer 24

Russian Ruble/Rouble

Question 25

What is the currency of Lithuania

Answer 25

Lisa’s

Question 26

What is the currency of United Kingdom

Answer 26

Pound Sterling

Question 27

What is the currency of Denmark

Answer 27

Krone

Question 28

What is the currency of Sweden

Answer 28

Krona

Question 29

What is the currency of Czech Republic

Answer 29

Czech Crown

Question 30

What is the currency of Hungary

Answer 30

Florint

Question 31

What is the currency of Poland

Answer 31

Zloty

Question 32

What is the currency of Romania

Answer 32

Leu

Question 33

What is the currency of Bulgaria

Answer 33

Lev

Question 34

What is the currency of Croatia

Answer 34

Croatian Kuna

Question 35

What is Foreign trade

Answer 35

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