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30 – 5pm, LT3) Week 4: Supply, July Week 5: July Week 6: 1 NID Aug Week 9: 22 Internal Goals & Policies Aug Week 10: 29 Internal Goals & Policies Aug Week 4: HCI 2009 C1 BT (a) Explain the factors which affect the demand for and supply of crude oil in the world.  (b) The Indian government fixes the prices of fuel sold by state firms whilst the Malaysia government provides fuel subsidies to control inflation and help lower income households. Evaluate the economic policies that are used by the Indian and Malaysian governments to help their people cope with rising fuel prices.  HCI 2009 Promos In 2007 the Singapore economy grew at 7.8%, goods and services tax went up from 5% to 7%, and there were active campaigns on healthy living. Assess the likely effects of the above changes on consumers’ expenditure on fast food.  HCI 2010 Promos In 2009, several luxury car makers offered lower prices for their existing range of models. In addition, they introduced smaller engine capacity cars at affordable prices and invested heavily on advertisements. As a result they did better in sales despite an on-going recession. Discuss the relevance of different elasticity concepts to luxury car makers aiming to increase profits.  Nov 2008 EQ1 Developments in modern technology, such as faster broadband internet connections, portable DVD players, iPods and MP3 players, have had major impacts on the demand for and supply of recorded music and associated products. Assess how the markets involved might be affected by these developments.  Topic 18 Demand, Application 25 NIA, NID
The investments that Singapore attracted last year will eventually add $13. The Asian economies continued to see robust expansion.4 billion annually to the economy.  (b) Discuss the impact of an increase in household savings on the national income of Singapore. Source: The Straits Times. 2007 Explain the effect of a strong external trade sector on national income of an economy. supported by strong domestic demand and external trade.  Week 9: HCI 2009 Prelims 1 (a) Explain the likely causes of unemployment and inflation in Singapore.5 per cent in 2007.  HCI 2010 Promos Japan is still one of the largest economies in the world with a real Gross Domestic Product (GDP) per capita of US$41. In comparison. A booming performance at home and better-than-expected conditions overseas have led the government to project that the Singapore economy will grow by between 4.9 per cent in 2006 reflects an improvement in the living standards of Singapore residents.5 to 6. Inflation is expected to remain strong in many countries despite possible slowdown in the global economy.  HCI 2009 Promos a) Explain the main determinants of investment in Singapore.9 per cent in 2006. Singapore real GDP per capita stood at US$39. Source: Economic Survey of Singapore. Singapore has a consistently high savings rates and its gross national savings increased over the past 5 years. as supply conditions in food and commodities markets remain tight.951.  Week 6: HCI 2008 C2 BT2 1.  b) Discuss whether an increase in investment in Singapore will necessarily lead to an increase in employment. (a) Explain whether real GDP per capita is a good comparison of standard of living between Singapore and Japan. 30 Jan 2007 and 15 Feb 2007 Discuss whether the growth of the Singapore economy by 7.480 in 2008.  .Week 5: Singapore’s GDP grew by 7.
the world’s largest economy. 30 Jan 2007 and 15 Feb 2007 Discuss the effects of Singapore government’s policies targeting at investment on the economy.  (b) To what extent is a higher rate of economic growth always beneficial for South Africa?  . Source: The Straits Times.  2 (a) Explain why an economy is able to enjoy low rates of inflation.(b) Discuss the extent to which demand-side policies could be adopted to address the problems of inflation and unemployment in Singapore.4 billion annually to the economy.  (b) Discuss whether fiscal policy is the best policy to overcome the most significant macro-economic problems experienced by the Singapore economy during the sub-prime mortgage crisis. with $75 billion in improved roads.9 per cent in 2006. 27 June 2009 Singapore Institute of International Affairs (SIIA). (a) Explain the effects of the sub-prime mortagage crisis on Singapore’s internal macroeconomic performance.5%.” Source: The New York Times. a reduction in unemployment and the potential enhancement of international investment and tourism. analysts have said that any signs of slowdown could impact those economies or industries highly dependent on the US.  (b) In 2008 inflation shot up to 6. 12 May 2008 (a) Explain the impact of hosting the 2010 FIFA World Cup on the different types of unemployment in South Africa. The investments that Singapore attracted last year will eventually add $13.  Week 10: Singapore’s GDP grew by 7.5 per cent in 2007.  NJC 2010 Prelims “The 2010 FIFA World Cup is viewed as a defining moment for South Africa. being hit by the sub-prime mortgage crisis. Discuss whether this necessarily brings about harmful effects on Singapore economy.5 to 6. airports and other infrastructure. A booming performance at home and better-than-expected conditions overseas have led the government to project that the Singapore economy will grow by between 4.  HCI 2010 Promos With the United States.
. Economic development has been more rapid in coastal provinces than in the interior.Term 4 Week 1: HCI 2009 Promos CSQ Extract 1: China’s Rise China's economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. The Chinese government faces numerous economic development challenges. Measured on a purchasing power parity (PPP) basis that adjusts for price differences. China has shown a restorative strength that six months ago many doubted it had. .9% in the second quarter and will now probably expand 8% or more this year. This is carried out while it still continued its effort to privatize the inefficient state owned industries that falter in the face of growing competition from the multinationals that have moved operations to China to take advantage of its low labour cost and huge domestic market. and containing environmental damage related to the economy's rapid transformation. The economy grew 7. and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work. still China has invigorated its support for leading state-owned enterprises in sectors it considers important to "economic security. including: spending more to strengthen its social safety net. Although it has opened up its economy in recent years. China has snapped back. including pension and health system reform. sustaining adequate job growth for rural-urban migrant workers and those laid off from state-owned enterprises. reducing corruption and other economic crimes. China is one of the world’s largest recipients of foreign direct investment (FDI) which has not only provided employment opportunities for the locals. Japan and all of Europe mired in the worst global recession in 30 years. although in per capita terms the country is still lower middleincome. the rapid growth of the non-state sector. A devastating slump in exports crippled growth late last year. Factory production has begun to edge up.S. and expanded to include the gradual liberalization of prices. Adapted from Thomson Reuters Jan 2009 and CIA Factbook 2009 Extract 2: Can China save the World? With the U. and the opening to foreign trade and investment. China has generally implemented reforms in a gradualist fashion. Reforms started in the late 1970s with the phasing out of collectivized agriculture. to counteract a low domestic demand. in part because Chinese consumers continue to spend money at a healthy pace. the foundation of a diversified banking system. but has also become an important source for technology transfers. but on the back of a US$586 billion government stimulus program. China in 2008 stood as the second-largest economy in the world after the US." explicitly looking to foster globally competitive national champions. increased autonomy for state enterprises. Today.
the economy may resume its downward track later in the year. Nations that depend on producing commodities. the best possible answer to the question of whether China can save the world is: Not yet.Auto sales. In addition. astonishingly. Even as China's consumers feel richer. China will. it will probably not. Adapted from Time. health-care and social-security systems -. Moreover. "Everyone wants to know the same thing: Can China save the world?" The speed and relative success so far of China's stimulus stands in stark contrast with that of the U. Still. retail sales in China this year are up 16%. Beijing's government spending will generate more than 80% of the country's overall economic growth this year. China is not yet the leader of the global economy. continuing to provide the increase in prosperity that has underpinned political stability. Emergency spending measures simply added to existing schemes already under way. cleaning up decades of environmental degradation. account for almost three-quarters of the world's economic growth. once again making China the largest market for automobiles in the world.S. 2000-2008 Real GDP (US$ bn) 2000 1457 2001 1578 2002 1722 2003 1894 2004 2085 2005 2303 2006 2570 2007 2904 2008 3165 . most Chinese still can't afford a Volkswagen. This is partly because China was already in the midst of a nationwide infrastructure program when the recession hit. Asia's exportdriven economies are sputtering back to life. China still faces a number of internal challenges – a massive shift of population from rural areas to cities. their share of its economy may not change much until Beijing enacts reforms to the rural infrastructure. let alone a BMW. but the recovery may only be temporary. let alone the rest of the world.steps that would give people more confidence to spend rather than save. As Shanghai-based economist Andy Xie puts it. ahead of the U. economists do not believe that the relatively poor Chinese consumers have the purchasing power to rescue China's economy. such as Australia and Brazil. although it appears to be getting there. be enough to drag the rest of the world into a recovery. which rose in March for the third straight month. Some aspects of China's glimmers of economic turnaround do seem as though they might offer hope to the country's trading partners. Helped by trade with China. the International Monetary Fund (IMF) forecasts that in the three years from 2008 to 2010. helped significantly by government subsidies for small-car purchases. According to a recent study by the World Bank. have benefited immensely over the past six months as demand from China has driven up the price of raw materials. on its own. Brisk though auto sales may be. Plenty of economists doubt that China's economy is as sound as it appears. Those statistics. Given their scale. Take car sales. Without a recovery in China's hugely important export sector. 10 Apr and 10 Aug 2009 Table 1: Selected Key Macroeconomic Indicators for China.S. you'd think. Overall. Ultimately. hit an all-time record in April. would bring good news to the world’s automobile industry. Overall. Even though China’s economy continues to power ahead. it should surprise nobody that it is still most concerned with saving itself economically — not anyone else.
8 4.3 8.Growth in real GDP (% change) FDI Inflows (US$ bn) Growth in FDI Inflows (% change) Budget balance (% of GDP) Consumer prices (% change) 8. Describe the trend of growth in FDI inflows and growth in real GDP observed from Table 1.4 5.6 -0. predict the change in the Chinese government budget balance in 2009. To what extent is the relationship described in a(i) consistent with the observation made in a(ii)?    (b ) (c ) Discuss whether the data provided is sufficient to suggest an improvement in the living standard of an average Chinese resident from 2000 to 2008.3 203 5.5 0.1 217 6.1 245 7.7 9.9 3. explain how an increase in FDI inflows could affect economic growth.8 13 327 11.8% -2.S.1% -2.8 Adapted from EIU Statistics Table 2: U.8 10.2 11.2 1.6 293 7.7% -0.4 193 3.    (d ) To what extent can China’s government stimulus plan power her economy to lead the rest of the world to a recovery? [10 ] [Total: 30] .2% 2.1 10.0 % -1.3 0.6 % 0.5% -1.6 9 NA NA -0.000 Domestic consumption (as % of 70% GDP) Annual per capita income US$39. With reference to the data.4 272 11.0 228 5.4% 40% US$6.8 1. Economy versus China’s Economy Macroeconomic Indicator GDP GDP (as % of global GDP) United States US$14 trillion 21% China US$4.8 1.4 trillion 6. 10 Apr 2009 Questions (a ) (i) (ii) (iii) Using AD-AS analysis.9% 2.3 10.000 Adapted from Time. (i) (ii ) Describe the trend in the Chinese government budget balance (% of GDP) from 2003 to 2008.
officials are cutting interest rates to keep the economy growing. Like the Fed. along with the prices of basic commodities like wheat and steel. Mr Iswaran said. many people are hearing an echo . For central bankers. Singapore's economy grew by 4. On one hand. economy Lately. However. And according Mr Iswaran.S.5 per cent in April and May.faintly perhaps but distinctly audible of the stagflation of the 1970s. chief investment strategist of the Global Wealth Management Group of Morgan Stanley." said David Durst. economies Extract 4 The Specter of Stagflation Looms over U. he said that stagflation – where rising inflation meets falling industrial production and high unemployment . Bernanke is cutting rates in a headlong rush to blunt the risks of recession. prices will continue to go up.3 per cent in the first half of this . S Iswaran. Ben Bernanke. economy with another wave of cheap money. "They are going to take care of the growth situation and then fight inflation when the economy gets stronger. "They are going to fix the wound now. the Federal Reserve is risking its hard-won credibility as an inflation fighter. and maybe even allowing them to escalate. "Singapore is not facing stagflation. after years of only modest increases. all this could not come at a worse time. Even as economic growth sags. may be breaking out of its box. Once the interest rate cuts have nursed the economy through the next few difficult quarters. especially the Federal Reserve chairman.S. With the credit markets in disarray from the collapse of the housing bubble. the Fed can easily raise rates again to respond to any pickup in inflation. On the other hand. And there are signs that overall inflation. Analysts say that by tolerating such price rises.S. the fear of rising inflation makes it more difficult for the Fed to jolt the U. The consensus view of economists is that the expected slowdown is likely to create enough spare capacity to suck inflationary pressures out of the economy. Dec 1. with inflation remaining at a rate that Singaporeans have not experienced until recently. but inflation will remain The Singapore economy is not facing stagflation.is unlikely. oil and gasoline prices are surging to new heights." Source: Adapted from The New York Times. Gold prices are on the rise.Week 2: HCI 2010 Prelims CSQ2 Singapore and U. which will ultimately require it to push interest rates higher than they would have had to in order to contain the damage. Prices have been rising in Singapore with inflation hitting a 26-year high of 7. 2008 Extract 5 high Singapore not facing stagflation. they say. economists generally remain more concerned about the immediate threat of recession than the more distant fear of higher inflation. according to the Senior Minister of State for Trade and Industry.
Those who fear a double dip warn that companies. and unemployment remains low. the strong pipeline of foreign investments and tourism projects that we have secured will also provide a certain level of support to the economy for the rest of the year and beyond. No wonder Ben Bernanke. Cheap money. "In Singapore. following months of cooling due to high oil prices and weakening consumer confidence. But growth since the start of 2010 has dropped back. Falling consumer confidence." He said that we also have to take care that wage growth does not exceed growth in productivity so as not to set off a domestic wage-price inflation spiral. and leading indicators point to even weaker activity in the second half of the year. higher public spending and bank bailouts acted like a massive shot of adrenaline and appeared to do the trick.year. Slower growth in industrial production. Gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. even if awash with cash. it is important that companies continue to upgrade business capabilities and enhance competitive edge. The US economy has traditionally had good self-healing properties. And this slowing growth is compounded by steps to contain accelerating inflation . Americans can expect the Fed to leave interest rates at current emergency levels for some time to come. These projects will give rise to new activities and help to create jobs. Stubbornly high levels of unemployment." Worldwide growth is expected to remain soft in the second half of this year. followed by another recession. the world's most powerful central banker. appeared a worried man in his testimony to Congress about the state of the US economy last week. Our job market remained healthy in the first quarter of the year. the Singapore government remains upbeat. it grew by 1. in April 2008 the Monetary Authority of Singapore shifted the band up by an estimated 2 percent in response to inflation concerns and upward pressures on the exchange rate. and after plunging into recession in late 2008 and early 2009 it returned to growth in the middle of last year. However. "On the 1 A double-dip recession refers to a recession followed by a short-lived recovery. During this period of economic volatility. are not going to invest unless they can expect strong demand for their products. Source: Adapted from Channel NewsAsia. Following a slight increase in the slope of its policy band for the nominal effective exchange rate of the Singapore dollar last October. 13 Aug 2008 Extract 6 Spectre of the double-dip1 haunts uneasy US A crippled housing market. . Stubbornly high unemployment and the bombed-out state of the housing market help to explain why consumer confidence has nose-dived recently.a situation not unique to Singapore. tax breaks. Mr Iswaran said.000 jobs were created. More than 73.4%. In the final quarter of 2009. But Stephen Lewis at Monument Securities says cheap money alone is unlikely to turn the economy around soon. 21 July 2008 and International Monetary Fund Public Information Notice. Monetary policy has been tightened further.
more accurately. 2010 Fig 1: Singapore’s Quarterly GDP Growth Source: MAS Survey of Professional Forecasters: March 2010 Fig 2: US unemployment rate (%) Fig 3: US Consumer Price Index Source: Bureau of Labour Statistics .guardian.co. be interpreted as evidence of an economy in depression. in at least one quarter in the next three." Adapted from: http://www.balance of probabilities it seems that. 25 July. US GDP will record a quarter-on-quarter decline.uk. Such a development would excite talk of a 'double-dip' recession. But it should.
Questions: a (i) Explain what is meant by GDP at constant prices?  (ii Describe the trend in GDP in Singapore from 2007 (Q3) to 2009  ) (Q3). explain why the Minister of State  remains upbeat about future economic situation in Singapore despite the high inflation rate. Total: [30m] . b With the aid of a diagram. Explain how the data suggest that the US is heading towards stagflation?  c (i) (ii “… economists generally remain more concerned about the  ) immediate threat of recession than the more distant fear of higher inflation.” To what extent is the above view of the economists justified? d Examine the relative success of the rescue packages adopted  by the US and the Singapore governments to help the economies.