Assignment Details:

The Irish government must respond to the severe economic downturn caused by the COVID-19 pandemic; such a response may act to stimulate the economy or promote living within our means as set out by the theories of Keynesian Economics and Economic Liberalism respectfully.
Compare and contrast these different potential responses in at least four sectors of the Irish economy.

Learning outcomes:

LO2. Explain the broad principles of macroeconomics and the role of government intervention
LO3. Describe the main features of the Irish economy
LO4. Interpret standard economic models of the market and of market intervention

In your answer you should:

1. Describe the Irish economy using the circular flow of income;
2. Briefly outline the theories of economic liberalism and Keynesian economics;
3. Use the model of demand and supply to explain how markets work;
4. Discuss and describe how international trade can affect an economy’s potential output;
5. Debate the role of the welfare state;
6. Analyze potential labor market changes;
7. Analyze any potential trade-off between unemployment and

Your answer should have an introduction, main body, and conclusion. While some attention of your answer should be focused on the theoretical definition, the main focus of your answer should concentrate on the extent to how the state may act and the economic arguments both for and against these actions by using the course material and external evidence such as CSO data.
It is important that you answer the question directed at you. In essence, the question is seeking a response to contrasting arguments around government intervention in the Irish economy. Your answer should be a well-balanced economic argument identifying the various options open to the government.
Diagrams, tables, graphs, and their descriptions are to be attached as appendixes and are excluded from the overall word count, you should reference them in your answer.
Your answer must contain a reference list in a separate section at the end of your answer. References and the reference section are also excluded from the word count.

Brief:

This assignment accounts for 40% of the Applied Economics module.
There are six questions. Answer all questions in every section.
Students should use their Ballsbridge College ID and initials and class, not their name, on their assignments, for example, a student named Joe Bloggs in AUC class with a Ballsbridge College ID of BBCFE123 should type ‘BBCFE123 JB AUC’ in his assignment footer and on the cover sheet and for the assignment name when saving the document.

Question 1:

a) Name three barriers to free trade.
b) Define the Balance of Trade?
c) Define the Balance of Payments
d) What is the Law of Comparative Advantage
e) “When the UK leaves the EU it will be good for British international trade.” Discuss this statement, stating whether you agree or disagree with it and offer economics-based arguments to support your position.

Question 2:

a) Name any three characteristics of a free enterprise economic system.
b) State the Law of Demand.
c) Illustrate each of the following events using a supply and demand diagram for the butter market. Each diagram should clearly show the demand curve, supply curve and equilibrium point, as well as the Price and Quantity axes.
i) Show what would happen when the price of margarine rises
ii) A reputable medical journal publishes a report that butter is unhealthy.
d) What causes a movement along a supply curve?
e) List two reasons why a supply curve might shift to the right?

Question 3:

a) List the assumptions of a perfectly competitive market
b) Give two examples of monopolist markets in Ireland
c) Microsoft is a monopolist in the PC operating system market. Do you agree or disagree with this statement? Give three reasons to support your argument.

a) Calculate the national income of Ireland using the Income Method and by selecting from the following data: Total Rent – €30bn; Total Children’s Allowance Payments – €12bn; Total Wages – €150bn; Total Interest Income – €20bn; Total Profits – €50bn; Total motorbike sales – €45 million.
b) Irish GDP is higher than Irish GNP. Which is a more accurate way to measure the wealth of the inhabitants of the country? Why is this true?

Question 5:

a) When a country is entering a recession, why should a government increase spending?
b) List three sources of revenue for the government’s annual budget.
c) The Japanese government wishes the economy to grow more quickly, to create employment. Suggest three measures the government could take to stimulate the economy, with regards to the annual government budget; international exchange rates; and interest rates.

Question 6:

The following table tracks the costs of production incurred by a shoemaker producing shoes.

a. Complete the Total Costs and Marginal Costs columns for between 6 and 9 units.
b. Suggest one reason which could explain why average costs declined for the first four pairs of shoes?
c. At what production levels did the shoemaker experience diseconomies of scale?