Various Junior Colleges Preliminary Examinations Questions (2010)

Demand and Supply

1. The growth of the Asia Pacific tourism market, fuelled by the growing (AJC)
middle class in China, India and ASEAN as well as the emergence of
low cost airlines, presents significant opportunities. Singapore has to
capture her fair share of the growing tourism pie because many
countries in the region are moving quickly to develop major tourist
attractions and new tourism products.

Source: Ministry of Trade and Industry website

(a) Using relevant elasticity concepts, account for Singapore's

decision to open the Integrated Resorts. [10]

(b) Assess how related markets might be affected by the opening

of the Integrated Resorts. [15]

2. According to the United Nations (UN) Food and Agricultural (ACJC)

Organization (FAO), wheat has doubled in price; maize is nearly 50%
and rice is 20% more expensive than a year ago. Record world prices
for most staple foods have not only led to food price inflation in many
countries but have had major impact on the market for fertilizers and
meat products.

Adapted from The Guardian, 3 November 2007

(a) Explain the likely reasons for the record rise in staple food
prices in recent years. [10]

(b) Assess how the markets for fertilizers and meat products
might be affected by these price increases. [15]

3. In November 2008, political turmoil caused the closure of the (CJC)

Bangkok's Suvarnabhumi International Airport.

(a) Using demand and supply analysis, explain how the above
closure may affect the tourism related industries in Bangkok.
[12]

(b) Discuss how the tourism related industries in Bangkok could

reduce the impacts of or increase the gains from the turmoil.
[13]

4. The strong Asian economic recovery and low interest rates fuelled (DHS)
the property market in Singapore. At the same time, the government
is releasing more new HDB units and more land for sale to private
developers.

1
 (a) With the use of a relevant demand elasticity concept, explain
the relationship between public and private housing. [8]

(b) Assess the impact of the above events on the private and
public property markets in Singapore. [17]

5. In light of the global economic downturn, the Government has (NJC)

announced a personal income tax rebate of 20%. In addition, a 40%
property tax rebate is given for industrial and commercial properties
to help reduce the cost of running businesses.

Ministry of Finance, Singapore Budget 2009

Discuss the effect on market equilibrium of the above budget

initiatives for different types of goods and services. [25]

6. Fears of a property bubble forming saw the government introducing (MJC)

measures such as removing easy financing schemes to cool the
private homes sector. But Mr Mah Bow Tan said a call for the
government to artificially dampen prices is not the solution.

Channel NewsAsia 29 Dec 2009

(a) Explain the determinants of housing prices in Singapore. [10]

(b) How far would you support the government's stand not to
artificially dampen prices in the housing market? [15]

7. With economic growth and the Singapore government's move away (HCI)
from direct taxes towards indirect taxes, examine the impact on
business sales and revenue of various types of goods and services.
[25]

8. “We must implement subsidy reforms for foodstuffs that will remove (NYJC)
distortions in the marketplace and enable us to better target our
resources to those most in need, and on investments that will provide
lasting benefits for Malaysians''

Statement from Malaysian Prime Minister’s Office, 15 July 2010

(a) Using economic analysis, explain how the market for

foodstuffs has been affected by the subsidies. [10]

(b) Discuss the view that the Malaysian government should cut
subsidies for foodstuffs to better target resources to those
most in need. [15]

9. Starbucks experiences a decline in customer visit in America. The (PJC)

current economic environment is the weakest in the company's
history, marked by lower home values and rising costs for energy,
2
 food and other products that are directly impacting Starbuck’s
customers. Starbucks has also been dealing with fierce coffee
competition from McDonald's and Dunkin' Donuts.
Adapted from The Guardian, 24 April 2008

(a) Explain what might cause Starbucks to experience a decline in

customer visits in America. [10]

(b) Assess the relevance of price elasticity of demand, income

elasticity of demand and cross elasticity of demand to the
Chief Executive of Starbucks who aims to increase sales
revenue. [15]

10. Music recording companies have been plagued with the issue of (RJC)
illegal distribution of their music and of lost sales from their digital
recording media like CDs. On the other hand, consumers have been
willing to pay for online music services by Apple iTunes to download
songs of their preference for a price of $0.99 each.

(a) Distinguish between private goods and public goods and

consider whether digital content is a public good. [12]

(b) Discuss the effectiveness and desirability of protecting

intellectual property rights. [13]

12. With the recovery of the world economy and the opening of the two (MI)
integrated resorts which housed casinos, tourist spots like Universal
Studio and new hotels, the tourist trade in Singapore will be greatly
affected.

Assess how the hotel and its related industries might be affected by
these developments. [25]

13. The government has announced better than expected economic data (RVHS)
and a sizeable cut in the number of certificate of entitlement (COE) in
the next two quarters.

(a) Explain, with the help of a diagram, the concept of scarcity,

choice and opportunity cost in view of the underlying objective
of the certificate of entitlement. [10]

(b) Assess the impact of the above announcements on the

government and prospective car buyers in the current quarter
and the subsequent quarter. [15]

14. “There has been a sharper rise in world petroleum prices compared (SAJC)
to food prices in the last 10 years.”

Discuss the likely causes of the above and its effects on the global

3
 allocation of resources. [25]

15. (a) Using the concept of opportunity cost, explain the essential (TJC)
problem of economics. [10]

(b) Discuss whether the free market is the best way to solve this
problem. [15]

16. Raw commodity prices such as lead, copper, zinc and oil have all (TPJC)
skyrocketed in the past six years. Growing demand from China, India
and other developing economies is often cited as the reason. But
that demand and periodic supply disruptions alone, cannot be
responsible for extent of price increases. Markets can also be driven
by speculations but there are concerns about alleged collusion and
manipulation.

Adapted from Business Times, 22th Nov 2007

(a) Explain the possible factors leading to large increases in the

price of raw commodities. [10]

(b) In light of the current challenge of rising raw commodity prices,

comment on some strategies that can be undertaken by a car
producer like General Motors and Toyota in their pursuit of
profits. [15]

Various Junior Colleges Preliminary Examinations Questions (2010)

Market Structure
4
 ''The behaviour of firms profits in reality is determined primarily by the (AJC)
1. need to maintain profits.” Discuss. [25]

2. The growth of emerging economies such as China and India has (ACJC)
seen their companies growing into global corporate giants by
acquiring big established companies of Western economies.

(a) Explain why companies from emerging economies might want

to acquire those of Western economies. [10]

(b) Discuss how such acquisitions might affect the consumers and
producers in the industries of the Western economies where
these occur. [15]

3. Food service management company Kopitiam Group is branching (CJC)

into the fast food business. It is bringing the franchise of American
fast food chain Wendy's back to Singapore after more than 10 years.

Source: Channel NewsAsia, December 2009

(a) Explain how a firm like Wendy's is likely to determine its output
and pricing decisions. [10]

(b) Discuss if product differentiation is the best way for firms in an

industry like the fast food industry to compete. [15]

4. Many business buyers buy Dell personal computers through its (DHS)
website. A standard Dell Latitude E6400 would sell for $1,197 if the
buyer clicks to the webpage for ''small & medium business'' or for
$1,339 if the buyer clicks to the webpage for ''Large Business''.

Luke M. Froeb (2009), Managerial Economics: A Problem Solving Approach

(a) Explain, whether this pricing strategy could be considered to

be an example of price discrimination. [10]

(b) Discuss whether the rapid expansion of e-commerce using the

internet is making it easier for firms to practise price
discrimination. [15]

5. (a) Explain why the Mass Rapid Transit (MRT) network can be (HCI)
considered a natural monopoly and explain how, according to
economic analysis, profit maximizing price is set. [10]

(b) Discuss to what extent the behaviour of the operator of MRT

disproves that economic analysis. [15]

6. Nokia, the world's largest telephone maker, said on Thursday that its (NYJC)
profit fell by 64 percent in the second quarter as it struggles to
5
 compete with innovative software experts Apple and Google in the
critical smartphone segment.

International Herald Tribune, 22 Jul 2010

(a) Explain the market structure that cellphone markers are likely
to operate in. [10]

(b) Assess whether it is always in the consumers’ interest when

firms are more competitive in the market. [15]

7. The market for package holidays in Singapore is served mainly by (MJC)

travel agencies such as Chan Brothers, Dynasty and SA tours. The
development of the Internet has enabled travelers to purchase their
holidays online, changing the way these markets work.

(a) Explain why profit levels can vary considerably across

oligopolistic industries. [10]

(b) Comment on the assertion that the development of the Internet

has resulted in better outcomes in the market for package
holidays for society and producers. [15]

8. “Consumers’ tastes and preferences is the most important factor in (NJC)

influencing a firm's pricing behaviour.” Discuss. [25]

9. Assess the view that oligopoly is the best market structure to promote (PJC)
efficiency, equity and innovation. [25]

10. The pay-TV market in the UK consists of Sky TV, Top-Up TV as well (RJC)
as Virgin Garry Media. At present, Sky TV controls 100% of the
subscription movie market and more than 80% of the premium sports
content. Ofcom, the regulator for UK's Communications industry,
recently decreed that Sky TV has to supply its premium services to its
rivals at a controlled price.

(a) Explain how, in economic theory, a firm determines price and

output. [10]

(b) To what extent will an industry, such as the above, always

lead to a few large firms dominating the industry? [15]

11. (a) Explain why firms have different profit levels in different markets. (MI)
[10]

(b) Discuss the extent to which the profit level of a firm will determine
its behaviour in the real world. [15]

12. Discuss why price competition, product development and product (RVHS)
promotion differ across industries and whether they benefit the
6
 consumers. [25]

13. The telecommunications industry is arguably a classic example of the (SAJC)

price leadership model.

(a) Explain the factors that a firm may consider in deciding

whether to engage in price leadership behaviour. [10]

(b) Comment on whether pricing decisions should remain as the

primary strategy for a telecommunications firm. [15]

14. Barriers to entry is the only factor influencing a firm's pricing strategy (SRJC)
and it would always lead to inefficiency. Discuss. [25]

15. With rising affluence, Singaporeans are demanding more (TJC)

convenience and higher quality goods. A small number of
supermarkets dominate the grocery senor but there has been a rise
in convenience stores due to busy lifestyles. Online grocery shopping
is also beginning to make inroads.

Adapted from KPMG, www.kpmg.com/global

(a) What can be learnt from perfect competition if the strict

assumptions make this an unrealistic market structure? [10]

(b) Discuss whether the interests of consumers are best served

by supermarkets or the more prolific convenience stores. [15]

16. Barriers to entry are an important criterion in determining the types of (TPJC)
profit earned by individual firms and the level of economic efficiency
between different market structures. Discuss this statement using
relevant examples in your country. [25]

17. In Singapore, the healthcare industry has been expanding over the (VJC)
past decade. The emergence of large medical groups such as
Healthway Medical Corporation offering a wide range of services in
family medicine, specialist care and dental care, has threatened the
survival of small neighbourhood clinics providing just basic healthcare
services, some of which have already been forced to close down.

(a) Explain the possible reasons for the expansion of the

healthcare industry over the past decade. [10]

(b) To what extent will the growth of large medical groups such as
Healthway Medical Corporation drive out small neighbourhood
clinics? [15]

7
 Various Junior Colleges Preliminary Examinations Questions (2010)

Market Failure

1. (a) Explain why income inequality is a cause for government (AJC)

intervention, and how price controls can aid in reducing the
inequality. [10]

(b) Assess the various policy measures that the Singapore

8
 government currently adopts to reduce inequality in income
distribution and consider whether new policies will be required. [15]
2. Resources are used to produce bottles for the water industry. (ACJC)
Around the world, campaigns to ban bottled water are under way as
consumers become aware of the environmental and economic costs
involved.

The Straits Times, Tuesday, July 14 2009

Discuss if a ban on bottled water is the best way to reduce the

environmental and economic costs involved. [25]

3. Discuss the view that direct provision by the government is the most (CJC)
effective policy to adopt in tackling the sources of market failure in
the health care industry in Singapore. [25]

4. (a) Explain, with supporting examples, how public and merit goods (DHS)
might lead to market failure. [10]

(b) Assess the view that public goods and merit goods should be the
major causes of government intervention within Singapore. [15]
5. Singapore government allocates the largest amount of the fiscal (HCI)
budget to the Ministry of Defence and the Ministry of Education.

Discuss whether the expenditure in defence and education by the

Singapore government contributes to the economic goals of
efficiency and economic growth. [25]

6. With reference to examples, discuss whether there is a need to (NJC)

change the current policies adopted by the Singapore government in
the market for healthcare. [25]

7. Assess the view that the Singapore government should use taxes (MJC)
rather than any other economic policies when dealing with the failure
associated with negative externalities. [25]

8. (a) Distinguish between public goods and demerit goods, making (NYJC)
clear in each case how they cause markets to fail. [12]

(b) Discuss whether taxation is the best policy to correct the market
failure resulting from demerit goods. [13]

9. (a) Explain whether public housing could be considered to be an (PJC)

example of a public good or merit good. [10]

(b) Discuss whether government intervention can lead to a more

efficient allocation of resources where merit goods exist in markets.

9
 [15]

10. The pricing of water should be left to market forces. However, some (RJC)
governments choose to subsidise water while others place a tax on
it. Comment. [25]

11. The Housing and Development Board (HDB) of Singapore has a (MI)
ruling that a couple who are buying a new flat in its public housing
program must have a combined monthly household income of not
more than $8000. This is because new HDB flats are heavily
subsidized by the government.

(a) Explain whether you consider a HDB flat a public or merit

good. [10]

(b) Discuss whether the above action by the Singapore

government leads to a
better allocation of resources in the housing market in
Singapore. [15]

12. (a) Analyse why government should intervene in the market for (RVHS)
healthcare. [12]

(b) Discuss whether the current interventions in the market for

healthcare by the Singapore government are sufficient. [13]

13. In 2009, the government announced a Resilience Package to (SAJC)

provide support for Singaporeans during the economic downturn.
The Resilience Package and other government schemes added an
estimated $1270 per household member on average in 2009.

(a) Explain why income inequality is a source of market failure.

[10]

(b) Evaluate the various measures which the government has put
in place over the years to reduce income inequality in
Singapore. [15]

14. Explain how public goods and merit goods cause markets to fail. (SRJC)
[10]

Consider whether market-based solutions are the best way for the
Singapore government to correct market failure that results from
the existence of a negative externality. [15]

15. Discuss how the Singapore government might use the concept of (TJC)
price elasticity of demand to determine the impact of a fall in
exchange rates on the country's balance of trade and the imposition

10
 of taxes on the market for demerit goods. [25]

16. (a) Distinguish between private and public goods using relevant (TPJC)
examples. [10]

(b) The economic activity of the Singapore government should be

restricted to the provision of public goods. Discuss. [15]

17. "Singaporean households across all income groups earned more (VJC)
money last year, said the Department of Statistics. In fact, its
findings showed the average monthly household income rose by
over 9 percent, the fastest rate of growth in 10 years. But the income
gap between the rich and poor has also widened."

Channel News Asia 13 Feb 2008

(a) Examine the main sources of income inequality in Singapore.

[10]

(b) Evaluate the policies currently used by the Singapore

government to address the issue of income inequality. [15]

Various Junior Colleges Preliminary Examinations Questions (2010)

Inflation

1. The Singapore economy is expected to grow by 4-6 percent for the (VJC)
whole of 2008. Annual inflation hit a 25 year high of 6.6 percent as
the local currency weakened and global oil price reached US$147 a
barrel, the highest ever recorded. Unemployment rate rose to 3.4
percent.

Adapted from Channel News Asia, Oct 2008

(a) Explain the possible causes of Singapore's high inflation rate.

11
 [10]

(b) To what extent is curbing inflation more important than

reducing unemployment in Singapore? [15]

2. 'The people in United States are weathering the economic storms of (NYJC)
stagflation, fueled by rising oil and food prices, and intensifying
housing and credit problems.'

Adapted from Worries grow for worse stagflation ', Associated Press, 26 Feb 2008

(a) Explain the economic problems faced by the United States.

[10]

(b) To what extent are demand management policies effective in

tackling stagflation? [15]

3. Analyze the recent sources of inflation in Singapore and assess (MJC)

whether low inflation should be the main macroeconomic objective of
the Singapore government. [25]

4. (a) Explain why a country may experience a persistent rise in its (CJC)
general price level. [10]

(b) To what extent is reducing inflation often the most important

macroeconomic goal for a government? [15]

5. (a) Explain how changes in the external value of a currency can (MI)
affect the domestic price level. [10]

(b) Discuss whether an increase in the general price level will affect
the domestic sector more than the external sector in Singapore. [15]

Various Junior Colleges Preliminary Examinations Questions (2010)

Unemployment/ Economic Growth

1. The US unemployment rate hit a record high of 10.1% in Oct 2009 (ACJC)
and the US trade deficit soars to US$36.4 billion for the month of
Nov 2009. Some Americans have advocated the imposition of harsh
tariff measures on imports from China if she fails to allow the Yuan to
appreciate.

(a) Is unemployment always caused by competition from cheaper

imports? [10]

(b) Discuss the effectiveness of the use of harsh tariff measures

12
 to prevent unemployment. [15]

2. The recent financial crisis saw Singapore's exports plunge as the (MJC)
global recession has affected almost all major economies in the
world, including the USA.

(a) Explain how the recent financial crisis would affect the circular
flow of income in a country. [10]

(b) Discuss the relative effectiveness of demand-side and supply-

side policies in sustaining economic growth and stability in
Singapore. [15]

3. "The 2010 FIFA World Cup is viewed as a defining moment for (NJC)
South Africa, with $75 billion in improved roads, airports and other
infrastructure; a reduction in unemployment and the potential
enhancement of international investment and tourism."

Source: The New York Times, 27 June 2009

(a) Explain the impact of hosting the 2010 FIFA World Cup on the
different types of unemployment in South Africa. [10]

(b) To what extent is a higher rate of economic growth always

beneficial for South Africa? [15]

4. Singapore's Ministry of Trade and Industry (MTI) announced on 14 (ACJC)

July 2010 that it expected the economy to expand by 13.0 to 15.0
per cent in 2010. The economy's real economic growth rate in 2009
was -1.3%.

Discuss whether small and open economies such as Singapore

should adopt different economic policies from those of large
economies in order to sustain healthy economic growth. [25]

5. The sheer magnitude of the economic crisis that the world faced in (DHS)
2008 had led to its equally large policy responses. The deterioration
in fiscal positions in major economies will be difficult to reverse.

(a) Explain the factors that determine the magnitude of fall in

GDP when aggregate demand declines. [10]

(b) In view of the above statement, discuss whether governments

should have avoided the use of Keynesian fiscal stimulus and
adopted alternative
policies to smooth out cyclical fluctuations instead. [15]

6. The pursuit of rapid economic growth should be the macroeconomic (NYJC)

priority of a government.
13
 To what extent do you agree with this statement? [25]

Various Junior Colleges Preliminary Examinations Questions (2010)

Balance of Payment

1. While integration into the world economy continues to underpin (SRJC)

Singapore's economic success, its exposure to the global business
cycle is posing considerable challenges at present.

(a) Explain how Singapore's balance of payments might have

been affected by the global business cycle in recent years.
[10]

(b) Discuss what policy options would best reduce a country's

balance of payments deficit. [15]

2. The Monetary Authority of Singapore (MAS) is leaning towards (RVHS)

14
 tightening monetary policy by allowing the Sing dollar to strengthen
although no final decision has been made.

(a) Explain why MAS's monetary policy is centred on the

exchange rate and the factors that could influence her
monetary policy stance. [10]

(b) Discuss whether a tightening monetary policy is the best

policy to maintain Singapore's favourable current account
balance. [15]

3. In the light of America's growing twin deficits (budget deficit and (RJC)
current account deficit), the US government is putting pressure on
China to revalue her domestic currency.

(a) Explain the problems faced by a country if it incurs a twin

deficit. [10]

(b) Discuss whether conflicts in achieving macroeconomic

objectives will arise for the Chinese authorities when she
revalues her domestic currency. [15]

4. China still keeps surplus of both the current account and the capital (PJC)
account in the first half of 2009.

(a) Explain why some countries such as China are experiencing

current account surplus while other countries such as USA
are experiencing current account deficit. [10]

(b) Assess whether surplus in both the current account and

capital account are always beneficial for an economy. [15]

5. (a) Explain Singapore's choice of exchange rate rather than interest (PJC)
rates as an instrument for its monetary policy. [10]

(b) Discuss whether changes in domestic or foreign factors are

more likely to influence the exchange rate of the Singapore
economy. [15]

6. China has always been accused of keeping the yuan undervalued to (HCI)
gain an unfair advantage in the international market-place

(a) Explain how China keeps the yuan undervalued. [8]

(b) The undervaluation of the yuan is expected to worsen

Singapore's balance of payments. To what extent would you

15
agree with this assertion? [17]

16
 Various Junior Colleges Preliminary Examinations Questions (2010)

Achievement of Macroeconomic Aims

1. The 0.8% contraction in the UK economy during the three months to (CJC)
June came as a big - and very much unwelcome - shock to the
City.... Industrial production output was down by 0.7%, construction
output was down by 2.2% and the dominant service sector shrank by
0.6%... Businesses are struggling to find banks willing to provide
them with working capital and have mothballed investment plans.

Source: The Guardian, July 2009

In light of the above statement, evaluate the impacts on the UK

economy and its implications on government policy decisions. [25]

2. The defining characteristic of Singapore is its high level of integration (TJC)

with the global economy. While it has exposed the country to the
onslaught of the current crisis, it is one of the key drivers of long-
term prosperity.

Singapore Competitiveness Report 2009

Given Singapore's high level of integration with the global economy,

discuss whether the government's attainment of long-term prosperity
will conflict with the achievement of other macroeconomic objectives.
[25]

3. (a) Explain the possible relationships between interest rate and (AJC)
exchange rate. [8]

(b) Assess whether Singapore has more to lose than the USA from a
rise in interest rates. [17]

4. "The decline in export earnings in 2009 for Singapore was resulted (SAJC)
from a steep decline in manufacturing output, reflecting the sharp
collapse in external demand."

(a) Explain the factors that might have caused the fall in
Singapore's export earnings in 2009. [10]

(b) Discuss the view that improving trade competitiveness will

help a country achieve its economic objectives. [15]

5. In the face of the worst global economic recession since the 1960s, (VJC)
Singapore's export-dependent economy is projected to register a 5%
GDP decline in 2009.

17
 The Economist, 23 Jan 2009

Discuss the possible impact of the global economic recession on a

small and open economy such as Singapore and whether fiscal
policy is the best way to reduce the harmful effects of this impact.
[25]

6. To what extent is a country's macroeconomic priority dependent on (DHS)

the openness of its economy? [25]

7. The Government will introduce a temporary Jobs Credit scheme (NJC)

which will encourage our businesses to preserve jobs in the
downturn. Employers will receive a 12% cash grant on the first
$2,500 of each month's wages for each employee on their CPF
payroll. Furthermore, to help Singaporeans stay employed or seek
reemployment, the Government launched the Skills Programme for
Upgrading and Resilience (SPUR) which provided higher course fee
support for individuals and companies that send their workers for
training."

Ministry of Finance, Singapore Budget 2009

Assess whether the above policies fully address the economic

priorities of the Singapore government in recent years. [25]

8. (a) Explain and compare the effects of the 2008 global financial crisis (RJC)
on small and open countries like Singapore and big countries like
Australia. [12]

(b) Discuss the best policy option that the Singapore government
could adopt to reduce the adverse impact of the crisis.[13]

9. Amidst weak employment and housing markets, consumers are (MI)

saving more and spending less than they have in decades.

New York Times

Discuss the possible impact of such consumer behaviour upon the

economy. [25]

10. Assess the usefulness of price elasticity of demand, income elasticity (SRJC)
of demand and price elasticity of supply to a government in
formulating microeconomic policies. [25]

11. (a) Explain why governments should be concerned about a fall in (SRJC)
real GDP. [10]

18
 (b) To achieve high and sustained growth, low inflation is an
essential condition. Hence, its attainment should be the main aim of
government economic policy. Discuss. [15]

12. In recent years, Singapore has had to cope with challenges such as (TPJC)
vulnerability to external shocks like rising oil prices, competition from
low-cost producers and rising wage inequality between skilled and
less skilled workers.

Adapted from The Straits Times, 15th July 2008

Assess the various policies that the Singapore government can

implement to cope with the various macroeconomic challenges and
rising wage inequality. [25]

Various Junior Colleges Preliminary Examinations Questions (2010)

19
 Trade and Globalization

1. (a) Explain whether globalisation could solve the economic problem of (AJC)
scarcity. [10]

(b) Discuss the extent to which correcting a balance of payments

deficit is the major reason for protectionism in the real world. [15]

2. (a) Explain the possible impacts that Free Trade Agreements have on (CJC)
Singapore's economy. [10]

(b) Discuss the effectiveness of using protectionism to address a

balance of trade deficit. [15]

3. (a) Explain the economic basis for specialization and free trade. [10] (ACJC)

(b) Discuss whether Singapore is among the economies that have

most to gain from freer movement of labour and capital between
countries. [15]

4. Governments have imposed minimum wage laws and price ceilings (DHS)
on basic necessities to help their citizens cope with the consequences
of globalisation.

In view of the trend towards globalisation, discuss whether

government intervention through price controls could ever be justified.
[25]

5. The globalization of trade puts pressure on natural resources around (HCI)

the world, helping to drive the rapid depletion of tropical forests and
the collapse of many ocean fisheries. On the other hand, countries
has benefited from the flow of labour into their countries.

(a) Explain how the pattern of trade will change as a result of the
changes in factor endowments stated above. [10]

(b) Discuss the role of government in the age of globalization. [15]

6. While Singapore has always shared strong trade ties with (MJC)
manufacturing powerhouse China, it recently forged closer economic
relationship with mineral-rich Peru. In 2008, Singapore's trade with
China amounts to S$6.92 billion while that with Peru stood at a
meagre S$75.2 million.

(a) Explain why Singapore signs FTAs with countries as diverse as

China and Peru. [10]

20
 (b) Assess the extent to which globalization has changed
Singapore's pattern of trade. [15]

7. It has been asserted that "the signing of more free trade agreements (NJC)
(FTAs) brings about benefits to consumers at the expense of local
producers".

(a) Explain how the signing of more FTAs can help an economy to
achieve its macroeconomic objectives. [10]

(b) Discuss whether you agree with the above assertion. [15]

8. Due to the global financial crisis, countries are quick to impose trade (NYJC)
barriers to solve their domestic woes.

(a) Explain the above statement. [10]

(b) In view of the protectionist tendency, discuss the measures that

the Singapore government can take to help alleviate the
problems caused by the financial crisis. [15]

9. Globalisation brings about the need for structural changes in an (RJC)

economy as it forces local industries to become competitive with
global producers.

Discuss whether globalisation necessarily results in more benefits for

developing countries than for developed countries. [25]

10. Globalization is often regarded to be a double-edged sword. (RVHS)

(a) Explain the relevance of this statement to Singapore. [12]

(b) Discuss whether the Singapore government currently adopts

appropriate policies to overcome the two most harmful effects
of globalization. [13]

11. Globalisation presents an opportunity for Singapore but there are (SAJC)
threats that the Government needs to be aware of and take
appropriate measures to balance the pros and the cons.

Source: The Straits Times Oct 2008

(a) Analyse the impact of globalisation on Singapore. [12]

(b) Discuss the relevance of the multiplier and the degree of

openness of the Singapore economy in influencing its
macroeconomic policies in dealing with the negative effects of

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 globalisation. [13]

12. "We are part of the world economy. We make chips, we make (TPJC)
Pharmaceuticals, we make petrochemicals. We consume maybe 1%
of what we make of these things. Probably less...We are making for
the world. We buy from the world, for the world ... that's how we
prosper."

PM Lee Hsien Loong Straits Times, 28th February 2009

(a) Explain the benefits of globalization to Singapore. [10]

(b) Discuss whether Singapore should move away from the export-
driven growth strategy, in the aftermath of the US subprime
mortgage crisis which led to a world-wide recession. [15]

13. (a) Explain why protectionism still exists with globalization. [12] (MI)

(b) Discuss some measures a government can adopt when confronted

with increasing protectionism. [13]

14. Despite the many risks of economic globalisation, most countries have (VJC)
been choosing to globalise their economies to a greater extent. This
has resulted in significant changes in the patterns of international
trade.

(a) Account for the possible changes in a country's trade pattern.

[10]

(b) Discuss whether countries should globalise their economies

despite the many risks of economic globalisation. [15]

15. American's car makers have complained that the weak yen makes (TPJC)
imported Japanese cars unfairly cheap. China has been also accused
of undervaluing the yuan in order to artificially foster economic
competitiveness and distorting the global pattern of trade.

Adapted from The Economist, 10th Feb 2007

(a) Examine the relevance of demand and supply analysis in

determining the pattern of trade between countries. [10]

(b) Discuss whether a rise in economic competitiveness via an

undervalued currency is the best way to achieve a
government's macroeconomic goals. [15]

16. In 2009, the United States banned flavoured cigarettes, arguing that (TJC)
they were particularly attractive to children who are not aware of the
22
harmful effects of smoking. But the ban excludes menthol-flavoured
cigarettes that are produced by American tobacco firms. Indonesia,
the world's largest producer of clove-flavoured cigarettes, argues that
this ban is protectionists in nature and is protesting at the WTO.

Adapted from Reuters News. 12th April 2010

(a) Explain why, prior to the ban, trade in clove-flavoured cigarettes

occurred between Indonesia and the USA. [10]

(b) Assess the arguments for the above ban on flavoured

cigarettes. [15]

Various Junior Colleges Preliminary Examinations Questions (2010)

Standard of Living/ Labour Productivity

23
1. Assess the view that raising labour productivity is the best way to (PJC)
achieve the macroeconomic aims of Singapore. [25]

2. For any economy, labour is a key ingredient in creating output and (SAJC)
powering growth. To raise output through labour, an economy can
either keep increasing the number of workers – which is not viable in
the long term - or raise the amount of output from each worker. More
productive workers tend to improve an economy's competitiveness.

Adapted from The Straits Times Dec 2009

Assess whether the policies currently undertaken by the Singapore

government to address declining productivity would bring more harm
than good to the economy. [25]

3. Labour productivity in Singapore has fallen by 3.9% in 2009. (SRJC)

(a) Analyse the possible macroeconomic outcomes of falling labour

productivity. [10]

(b) Discuss the view that supply-side policies are more effective
than demand-
management policies to achieve full employment in an
economy. [15]

4. (a) Explain the necessary information an economist would require to (TJC)

determine whether the standard of living of an economy has improved.
[10]

(b) Consider whether high household savings is always beneficial to

Singapore. [15]

5. (a) Explain how a change in the U.S. interest rate can lead to a lower (RVHSI)
circular flow of income and expenditure for Singapore. [12]

(b) Examine whether a lower circular flow of income and expenditure

necessarily mean a lower standard of living. [13]

6. Assess whether the Singapore government currently adopts (HCI)

appropriate policies to achieve high standard of living (SOL). [25]

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