The Google Apps email service has not been available for the past week. The problem should be fixed in the next few days.

Today the Government will present a mini-Budget in order to reduce spending by €500m. This is due to lower tax revenue this year because of the slowdown in construction and consumer spending. However, it is not all doom and gloom and the economy is in a better state than the media would have you believe.

• The Government will have to borrow more money but this money is for investment and not for day-to-day spending.
• Current revenue is still higher than current expenditure. The Government will still have a current budget surplus in 2008.
• If the Irish economy was a company, we would not have enough debt. Debt is not a bad thing if it is used for investment in infrastructure which will increase the productive capacity of the economy in the future. Ireland has a Debt/GDP ratio of 25% which is lower than every other Eurozone country with the exception of Luxembourg. Our private sector debt is high but the Government can afford to borrow for capital expenditure.

Source: www.davy.ie

Post your comments on what you thought of this year’s exam paper.

What did you think of it?
Any question you found difficult?
Did you need more time in the exam?

Just click on Comments at the top of this post.

We all know the price of oil continues to rise.

Source: etfzone.com

The black line shows the nominal price of oil. The blue line shows the real price of oil i.e. the price of oil taking inflation into account. As you can see from the chart, taking inflation into account, oil is now trading at an all-time high.

Various reasons have been put forward for this:

• Demand - greater demand for oil from growing economies such as China and India. Oil is a raw material and is needed for the production of consumer goods.
• Supply - is limited and the supplies that are left are difficult and more costly to access.
• Speculation - given the first two factors i.e. rising demand and a limited supply, it is inevitable speculators will trade the commodity. Also, pension funds and investors are now putting more money into oil as they see oil as a better investment than shares.

Another question frequently asked in relation to oil is:

Why does the price of a barrel of oil increase when the dollar falls in value?

Oil is priced in US dollars so you would expect oil to get cheaper (for non-US buyers) when the dollar falls but this is not the case. Here is an excellent explanation of why this is.

Here’s an excellent graphic from the New York Times on how they measure inflation in the USA. They also use a Consumer Price Index and measure 84,000 prices in 200 categories every month. You can see from the Pie Chart that TV sets recorded the biggest price fall from March 2007 to March 2008.

Can you find the percentage change in the price of Fuel Oil?

We carry too much cash and write too many cheques compared to our European neighbours. That’s according to IPSO (Irish Payments Services Organisation).

IPSO wants all cheques to be phased out in Ireland by 2016. Some European countries have already stopped using cheques as a method payment. The average person in Ireland writes 29 cheques per annum compared to a European average of 15. We also use cash a lot more for payments compared to other European countries. The high use of cheques and cash is costing the economy €1.4bn annually and is damaging our competitiveness.

Both individuals and businesses should be making greater use of plastic cards and online banking.

Here is a mindmap for Chapter 29 -The Balance of Payments and Foreign Exchange.

Remember all Mindmaps are in pdf format.

Download Balance of Payments Mindmap

Good luck to all those doing Junior Certificate Business Studies and Leaving Certificate Accounting, Business and Economics.

I will post some more mindmaps for the Balance of Payments before Monday.

Don’t forget you can email me (mrhannon at geralds dot ie) if you have any questions up to the day of the exam. Maybe post a comment after the exam as well. Just click on Comments at the top of this post.

The winner of this module’s stock competition for the 4A6 class is Kenneth Neary. Kenneth made a profit of €9,813.93 from the four stocks in his portfolio. Again, this is an excellent return of 9.8% in a short period of time and taking into account the current volatility in stock markets. Kenneth selected the following stocks for his portfolio:

• Microsoft (NYSE: MSFT)
• Apple (NYSE: AAPL)
• Progenics Pharmaceuticals (NYSE: PGNX)
• Take Two Interactive (NYSE: TTWO)

View Kenneth’s Portfolio

Here’s a MindMap for Chapter 22 on The Banking System.

Remember that all MindMaps on the blog are in pdf format so you will Adobe Reader to view the files.

Download MindMap for Banking