Section A

One or two of your chosen questions must be from this section

1. In 2009, Australia accumulated a surplus of 100 million cases of wine, enough to glut the
market several times over. There was no clear prospect of finding additional demand, either
domestic or foreign, to fill this gap. This happened during the 2009 financial crisis. France,
which experienced a similar situation, sent millions of wine, including some of its finer products,
to be converted into ethanol for use in fuelling automobiles.
Adapted from: The Economist
Discuss the impacts of the above scenario on wine manufacturers and other related markets
in 2009. [25]

2. Explain the features of an oligopoly and discuss the view that firms in an oligopolistic market
structure should always avoid price competition as a way to boost market share and profit. [25]

3. Governments intervene in the market when it sees that an allocatively inefficient outcome
is produced as a result of free market forces.
(a) Explain the sources of market failure that warrants the greatest intervention in a country
like Singapore. [10]
(b) Market failure can never be resolved without regulation. Discuss this statement in relation
to the sources of market failure identified in part (a) [15]
 Section B
One or two of your chosen questions must be from this section

4. Explain the causes of a Balance of Payments deficit and discuss its relationship with
economic growth. [25]

5. The Bank of Japan has reiterated their commitment to foster economic growth and inflation
through a cocktail of stimulus measures, one of which includes keeping its benchmark interest
rate at -0.1%, unchanged since the beginning of 2016.
Adapted from: Economics Calendar
(a) Explain the monetary policy that Singapore chooses to manage inflationary pressures. [10]
(b) Discuss whether the measures adopted by Japan will allow the country to meet its
macroeconomic objectives. [15]

6. US steel prices underwent a price recovery in 2016, but this recovery stalled in 2017, leading
US steel companies to believe that it has been caused by unfair competition. These
companies believe more tariffs are needed to make competition fair and to boost domestic
pricing.
Source: Various
(a) Explain the different types of protectionism that exists. [10]
(b) Discuss whether the size of the economy affects a governments decision to implement
protectionist measures. [15]