. (a) State and explain FIVE factors which affect a consumer's demand schedule. (25 marks)

(b) (i) Show, by means of a labelled diagram, the market demand and supply for a product.

Indicate the equilibrium price and quantity in this market.

(ii) Explain, with the aid of a separate diagram in each case, the effects which each of the

following may have on the above equilibrium position:

A successful advertising campaign in favour of the product is introduced;

A tariff on imports of the product is removed. (30 marks)

(c) Assume that the average spending on energy by a low-income family is 40 weekly. The

price of energy rises by 20% so that the same consumption by a low-income family would

now cost 48 weekly.

The government is considering introducing one of the following policy measures to assist

low-income families:

giving low- income families an increased allowance of 8 weekly (income

supplement);

subsidising the producers of energy so that energy can continue to be sold at the

initial price (price subsidy).

Which policy measure would you advise the government to take? Explain the economic

reasons for your answer

2. (a) A bank needs to keep a balance between its twin objectives of liquidity and profitability.

Explain the underlined terms. How does the bank reconcile these twin objectives? (20 marks)

(b) The Central Bank (now called the Central Bank and Financial Services Authority of Ireland)

continues to play a very important economic role in the Irish economy.

Explain the role it plays in the Irish economy. (30 marks)

(c) The euro is now well established as a currency in Ireland. Discuss the economic effects which

the introduction of the euro has had on:

Irish consumers;

Irish exporters and importers

a) In each of the following distinguish between the terms:

(i) monetary policy and fiscal policy;

(ii) progressive taxation and regressive taxation;

(iii) tax avoidance and tax evasion.