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DunmanHighSchool Year6PreliminaryExaminations2009 ECONOMICS Higher2

Paper2Essay 2hours15minutes 2:004:15p.m. Friday18September2009 AdditionalMaterials:



READTHESEINSTRUCTIONSFIRST Writeindarkblueorblackpenonbothsidesofthepaper. Youmayuseasoftpencilforanydiagrams,graphsorroughworking. Donotusestaples,paperclips,highlighters,glueorcorrectionfluid. Answerthreequestionsintotal,ofwhichonemustbefromSectionA,onefromSectionBandonefrom eitherSectionAorSectionB. Attheendoftheexamination,fastenallyourworkandthecoversheetsecurelytogether.Placethe coversheetontop. Thenumberofmarksisgiveninbrackets[]attheendofeachquestionorpartquestion. YouareremindedoftheneedforgoodEnglishandclearpresentationinyouranswers.


Section A 1 Outsourcing and the influx of foreign labour have hurt the low skilled Singaporeans in terms of falling wages, worsening inequality in Singapore. (a) Using economic analysis, explain why the wages of low skilled Singaporean workers have been falling. Discuss the policy options that the Singapore government can adopt to reduce the inequality of wages.




Large scale organisations can take advantage of cost advantages, go into regional markets and innovate more effectively than small businesses. As such, small and medium enterprises (SMEs) should be encouraged to expand their business. To what extent do you agree with the above statement? [25]

Discuss the effectiveness of the policies currently adopted by the Singapore government to address the market failure caused by merit and demerit goods. [25] Section B

Having sustained a steady economic growth in the last few years, the standard of living of Singaporeans has steadily risen as well. But these good times hinge crucially on the strength of the global economy. (a) If you were asked to show that the standard of living of Singapore citizens have improved against the people of other countries, explain what information you would need. To what extent can Singapore shield itself from a global economic downturn?




(a) (b)

Explain the main causes of inflation in your country. In the context of your country, comment on the view that monetary policy is the best way to cure inflation.



To what extent is the policy of gradual appreciation of the Singapore Dollar always a desirable approach to maintain economic stability in Singapore? [25]