National Junior College

Economics Department Preliminary Examinations for General Certificate of Education Advanced Level 2007 JC2 H2 Economics (Syllabus 9732)

ECONOMICS
Higher 2 Paper 2 Essay 2 hour 15 min Additional Materials: Answer Booklet / Paper

9732/2
11 September 2007

READ THESE INSTRUCTIONS FIRST Write your name and subject class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for diagrams, graphs or rough working.

Answer three questions in total, of which one must be from Section A, one from Section B, and one from either Section A or Section B.

The number of marks is given in brackets [ ] at the end of each question or part question. At the end of the examination, fasten all your work securely with the cover page given. Fill in the necessary information on the cover page.

You are reminded of the need for good English and clear presentation in your answers.

This document consists of 3 printed pages.

NJC 2007

NATIONAL JUNIOR COLLEGE Economics Department

[Turn Over

2 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 Jakarta heavily subsidizes the cost of fuel for ordinary Indonesians and faces a huge subsidy bill of as much as 138.6 trillion rupiah (S$22.3 billion) this year as a result of record high crude oil prices.
The Straits Times, 1 Sep 2005
st

(a) (b)

Explain what could lead to the record high oil prices.

[10]

Critically examine whether the use of subsidies is the best solution for the [15] Indonesian government in view of such high oil prices.

2(a) (b)

Explain, with the use of examples, the various types of price discrimination [10] seen in the market. To what extent is a monopoly more beneficial than a monopolistically 15] competitive industry?

Singtel yesterday launched its much anticipated Pay-TV service with 3 channels; bringing an end to StarHubs 12-year stronghold on the market
Adapted from The Straits Times,21 July 2007
st

(a) (b)

Explain how, a firm such as StarHub, may present a case of market failure.

[10]

Comment on the available policies to correct the above form of market failure. [15]

Section B One or two of your three chosen questions must be from this section. 4 The Government will continue to keep a tight watch for Singapore to remain on its growth path.
Minister Lim Hng Kiangs Parliamentary reply on 27 Aug 2007
th

Discuss the extent to which some policies as compared to others are more [25] likely to stimulate growth for the Singapore economy.

Asia has seen rapid growth, dramatic transformation and deepening interdependence and integration. Rapidly changing patterns of production and trade are causing painful structural adjustments. However, to grow and prosper, we must stay open and integrate ourselves with the global economy. America and Asia: Our Shared Future Speech by Mr Lee Hsien Loong, Prime
Minister of Singapore 3 May 2007
rd

Discuss whether Singapore should stay open and integrate with the global economy to achieve its macroeconomic objectives in the light of the problems resulting from the structural adjustments. [25]

NJC 2007

9732/11th Sept 2007

3 6 The undervalued yuan is one important cause of Chinas rising inflation and huge trade surplus with America. Many foreign economists argue that the government should revalue the yuans peg, widen its trading band or shift from a dollar peg to a basket of currencies.
Asia Times, 7 Jul 2002
th

(a) (b)

Discuss whether the undervalued yuan is the only cause to Chinas rising inflation and huge trade surplus with America. [12] Comment on the implications of a revaluation of the yuan on Singapores economy. [13]

End of Paper

NJC 2007

9732/11th Sept 2007