Our Economy: Strand 3 Comment The balance of payments can have a surplus, be balanced or have a deficit.


1. Surplus: total exports are greater than total imports. 2. Balanced: total exports equal total imports. 3. Deficit: total Imports are greater than total exports.


EXAM PREPARATION!


State ‘balance of payments’. Explain it with an example. Apply it to another unit.


P. 335


Go to page 335 of the activity book.


How Ireland can deal with a deficit or a surplus?


A balance of payments deficit means that Ireland imports more goods and services than they export. This means the government will have to borrow.


A balance of payments surplus means the country exports goods and services more than it imports. This means the government will have money to spend.


However, there are a number of ways governments can improve a balance of payment deficit and deal with a surplus.


Balance of Payments Deficit 1. Increase exports:


Use globalised marketing techniques, e.g. social media.


2. Reduce imports:


The Irish Government could place a tax on non-EU imports.


3. Import substitution:


Encourage a ‘buy Irish’ campaign. 4. Use government agencies:


IDA Ireland could encourage multinational companies to locate here and export their products/services.


Bord Bia and Fáilte Ireland promote Irish products and services abroad.


Balance of Payments Surplus 1. Service the national debt:


The extra money can be used to pay off some of our national debt.


2. Reduce taxes:


Extra money earned from a balance of payments surplus could reduce the tax burden on citizens.


3. Improve services:


Government could spend money on improving services and infrastructure.


Write It!


Calculate Ireland’s balance of payments using the following figures:


• Ireland exported €123 billion and imported €70 billion of goods.


• Ireland exported €115 billion and imported €60 billion of services.


422


STOP! WRITE IT!


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