SULIT MEA3023/0181/0 FINAL EXAMINATION SEMESTER I, ACADEMIC SESSION 2018/2019 DATE : JANUARY 2019 DURATION : 3 HOURS MEA3023 MALAYSIAN ECONOMY (EKONOMI MALAYSIA) INSTRUCTIONS TO CANDIDATES: 1. This paper contains FOUR (4) questions. 2, Answer ALL questions in the Answer Booklet provided. 3, Candidates are not allowed to bring any materials except stalioneries and on-programmable calculator into the examination hall without prior permission. 4, Candidates are not allowed to take question paper out of the examination hall 5. Please complete your particulars in Borang H and the Answer Booklet. DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE INSTRUCTED TO DO SO “Ti osson pers FOUR) re ees cgi coverage | HAKCIPTA TERPELIHARA USIM FA3023/018 114, ) Marks} hases of VP) and ONE (1) 8 marks) REE (9) 3 marts) structural amarks) 5 marks] marks) lopment marks) ) marks) 5 marks}suit MEA3023/A181/8 Question 3 ‘The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion, 12) Discuss FIVE (6) main causes of the 1997 Asian financial crisis. (10 marks) b) The Malaysian government set up the National Economic Recovery Pian (NERP) to recover from the 1987 economic crisis. Explain FIVE (5) objectives of the NERP. (10 marks) ©) List out FIVE (5) sign of recovery after recession period. (Smarks) (Total: 25 marks] Question 4 Read the Article below and answer the following questions. Income Inequality in Malaysia Income inequality, income gap, income disparity, these are all different words to refer to ‘one simple thing. Some people make more money than others. This can be a sensitive Issue to discuss within society because it involves a person's salary. Salary is based on the work that you do and is, therefore, something that people identify with very strongly. Most of us will spend the majority of our lives working. Because we spend so much time ‘working, our identity is influenced by the work that we do. The income that comes with your work then becomes @ measure of self-worth and when that happens, discussing income inequality can be difficult Although it might be a sensitive subject to discuss, income inequality i still an extremely important part of Malaysia's current economic situation and is a vital area of concern if the country wants to keep growing at its current pace. According to a 2014 Paw Giobal survey, 77 percent of Malaysians think that the gap between the rich and poor is @ big problem. This shows that the income gap is a major concern to most Malaysians. There 's a strong perception among Malaysians that the income gap is widening. To many People, it feels like the rich are getting richer while the poorer are getting poorer, This is enforced by the time delay between the rising cost of living and the rise of wages. Especially people in the lower income brackets can be vulnerable to these effects. To ‘address this growing concern, we take a look at the current income gap in Malaysia, ‘What is income inequality and why does it exist? Income inequality is based on income differences between the people of Malaysia. How much does one person make compared to the other? A reasonable level of inequality of income is not necessarily bad and can actually be stimulating for economic growth HAKCIPTA TERPELIHARA USIM 2‘SULIT MEA3023/0181/8 Here is why - inequality exists for a reason. If we all would make the same amount of money, nobody (companies, people) would be incentivized to improve their productivity. ‘This is the basis of capitalism, if you are more productive you get more income. Income equality can be caused by something as simple as two equally qualified colleagues doing the same work, but one working parttime and one fulztime. Alternatively, doctors make more money than Grab drivers, because they have made (greater investments in their education. If they would be paid the same, people would be hesitant to become doctors, because the time and money commitment are disproportionate to the rewards, Even though there is an economic argument for inequality, it is not ideal from a social standpoint. If we would let capitalism run its course without government intervention inequality can cause severe economic, social and political problems. With rising inequality, the majority will be discontent with how litle they have compared to the top 10 Percent because income is always concentrating on the most productive (or privileged) part of the population. The government should introduce programs that can reduce inequality and make sure that everyone has at least something to survive and can live a decent life. Currently, only 0.6 percent of the Malaysian people live below the national poverty ine, which is a good number and shows that Malaysia is on the right track. How is income inequality measured? ‘A very common and convenient way to measure income inequality is a ratio called the Gini Coefficient. Figure 1 shows the Gini Coefficient in Malaysia for the period 1970 to 2014, Figure 1: Gini Coefficient in Malaysia, 1970 - 2014 GINi COEFFICIENT MALAYSIA (1970 - 2014) Between 1970 and 2014, the Gini coefficient has dropped considerably from 0.51 in 1970 to 0.401 in 2014. This means that over the last 40 years the income inequality in Malaysia has improved, and the total income is more evenly spread throughout the Population. We can, therefore, conclude that the income gap in Malaysia is getting ‘smaller, Even though the income gap is getting smaller, the inequality might stil be higher than it should be. To demonstrate this, we can compare the Gini coefficient across other HAKCIPTA TERPELIHARA USIM 3SULIT MEA3029/0181/0 countries in the region and see if the Malaysian income gap is higher or lower than similar countries as shown in Figure 2, Figure 2: Gini Coefficient in the ASEAN Region Gini Coefficient across the ASEAN region (2015) SeRUne ter neacmmracse Lacan puttonpaaha Nt seemed Even though the inequality in Malaysia is decreasing, the inequality i sil far higher than ther ASEAN countries, when looking at the Gini coefficient. Only the Philppines and Singapore have a higher Gini Coefficient. We can, therefore, conclude that, across the ASEAN region, the income inequality in Malaysia is relatively high. ‘Adapted from Money Tips, May 2017 Required: 8) With a relevant diagram, show how Gini coefficient is calculated. (10 marks) >) Suggests THREE (3) ways to reduce income inequality in Malaysia, (15 marks) {[Total: 25 marks] END OF QUESTIONS Dicoak oe: Unit Peparssaan dan Penglazahan Bahacian Pengurusan Akademi Universi Sains Isom Malaysia HAKCIPTA TERPELIHARA USIM. 4