1 (a) Define each of the following terms:

(i) Current Budget Deficit;

(ii) Exchequer Borrowing Requirement;

(iii) Public Sector Borrowing Requirement;

(iv) National Debt.

(b) Ireland's National Debt grew from 36bn at end of 2006 to 50.4bn at end of 2008.

(i) Outline the major reasons for the increase in National Debt.

(ii) Describe the economic consequences (positive and negative) of the increase in National

Debt in recent years.

(c) The Irish economy will experience a substantial Current Budget Deficit for 2009. You have

been employed as an Economic Advisor to the Minister for Finance.

(i) State and explain two specific courses of action (one on the revenue side and one on the

expenditure side of the Government Account) you would advise the Minister to take in

order to reduce significantly the Current Budget Deficit.

(ii) Outline the possible economic effect(s) of each course of action you have chosen.

2. (a) The 'Law of Comparative Advantage' suggests that specialisation and trade increases world

output.

(i) Explain the meaning of the underlined term in the context of international trade.

(ii) Identify the main assumptions underlying this law.

(iii) Identify two sources of comparative advantage for the Irish economy.

(b) Ireland is a small open economy which relies very heavily on international trade.

(i) Discuss the importance of international trade to the Irish economy.

(ii) Are there any economic justifications for a government intervening in order to restrict

international trade? Outline reasons for your answer.

3. (a) Discuss the factors that influence the size of the Irish labour force.

(b) 'According to the Quarterly National Household Survey (QNHS) the rate of unemployment

was 7.7% in December 2008'.

(i) Name a source, other than QNHS, for unemployment statistics in Ireland.

(ii) State, with reasons, which of the measurements of unemployment used by each of these

sources gives the most accurate estimate of Irish unemployment.

(c) (i) Outline the major causes of the recent increases in unemployment in the Irish economy.

(ii) Discuss economic policies which the Irish government might pursue in order to reduce

the level of unemployment.