Suggested Answers of BT2 Revision Package - ASKnLearn

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E2 For an evaluative assessment based on economic analysis 3-4E1For an unexplained assessment or one that is not supported byeconomic analysis, e.g. a combination of policies is to be used,nature of the economy, etc.1-2(14) 2011 RVHS Prelim H2 Paper Q5In 2009, many countries introduced stimulus packages to deal with the impact of the globalfinancial crisis.a) Explain the factors that can undermine the impact of such stimulus package. [12]b) Assess the effectiveness of the policies used in Singapore to mitigate the most pressingissue of the global financial crisis. [13]Part (a)Size of multiplier• The size of the multiplier is calculated by k = 1/ (1-mpc) or 1/mpw, where mpw =mps+mpt+mpm.• The larger the mpc, the larger will be the size of the multiplier and hence the larger theeventual increase in national income and vice versa• Thus, increase in government spending and hence the stimulus package will have lesssignificant impact on increasing national income.Crowding out effects• Government may finance its deficit spending by borrowing from the credit market• Higher interest rates, in turn, tend to reduce or ‘crowd out’ consumption and investmentwhich are sensitive to interest rates.• Hence, the effectiveness of expansionary fiscal policy in stimulating aggregate demandwill be mitigated.Responses from consumers and investors• May not get the desired response from households and firms due to other reasons suchas poor economic outlook ahead.Size of fiscal stimulus
• If the size of the fiscal stimulus is of an insignificant proportion to GDP of the country, theimpact on national income and employment level will also be insignificant as not enoughare given to reach out to the masses.Knowledge, Application, Understanding and AnalysisL3For a developed explanation on factors which mayundermine the impact of the fiscal stimulus.9 - 12L2For an undeveloped explanation on the factors whichmay undermine the impact of the fiscal stimulus.5 - 8L1 Smattering of valid points 1 - 4Part (b): Most pressing issue: unemploymentFiscal policy• # government expenditure/ $ taxes I #AD I #NY I # employment• Examples of # government expenditure/ $ taxes: bringing forward of infrastructureprojects, reducing corporate tax/ hiring more public servants/• However, the size of the multiplier in Singapore tends to be small as compared to othercountries due to high withdrawals I not effectiveExchange rate policy• Depreciation of the SGD I # (X-M) I #NY I # employment• However, other countries had also depreciated their currency which in turn meant thatexports from Singapore were not that price competitive after all.Supply-side policyShort-run• Government introduced short run supply side policies to help firms cope with costs ofproduction• Examples: jobs credit scheme/ property tax rebates
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ST ANDREW’S JUNIOR COLLEGEH1 ECON
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demand for hotel accommodation. The
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Cost/Benefits/$ Welfare loss MSC =
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more than proportionate fall in qua
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Price S P 1 P 2 D 1 D 2 Market for
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ERP• Works by charging drivers an
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2010 YJC Prelims H1 Paper CSQ1: Hou
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quantity transacted increases and h
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with the large amount of subsidies
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(b) With the help of a diagram, ana
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Hence as long as the West is willin
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Marks Scheme:L3( 7 - 8m)L2(4 - 6m)L
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conclusion about absolute value of
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• Germany’s revival has been bu
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ising making labour relatively more
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(ii)With reference to the data, ass
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L3L2L1EA balanced discussion of the
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(b)Explain how a rise in interest r
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(d)Consider whether the evidence in
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The higher spending, translating in
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2010 RI (JC) Prelims H1 Paper CSQ2:
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This will increase SOL of Chinese a
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2. Appreciation is also needed to d
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Increase Real output for Asiaproduc
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Section B: EssaysMicroeconomics:1.
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Roads for Cars A X B Other infra
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With reference to Figure 2 above, (
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Conclusion:The future impact in the
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ConclusionSummarise and link to par
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Explain causes ofan increase in pri
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(b) Discuss the view that price con
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Take astandConclusionPrice ceiling
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Possible non-price determinants of
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Suggested answer (b)Price elasticit
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Limitations of non-pricing strategi
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Internet broadband connectionFoodEf
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3. Antithesis: success of policy do
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Page 84 and 85: Therefore the market is said to be
Page 86 and 87: (b) INTRODUCTIONTo address the prob
Page 88 and 89: However, a total ban does not makes
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Page 94 and 95: Besides the above, an increase in t
Page 96 and 97: lower standard of living. This is e
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Page 100 and 101: Explain how policies bring about ac
Page 102 and 103: ConclusionTo have sustained actual
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Page 110 and 111: Thesis (3) -Threat to improvement i
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Page 114 and 115: Trade PoliciesIn the light of an im
Page 116 and 117: • Real-‐wage unemployment o
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Page 120 and 121: aggregate demand in U.S. and decrea
Page 122 and 123: Marking SchemeL3Well developed expl
Page 124 and 125: Conclusion on demand management pol
Page 128 and 129: Long run• Provided higher course
Page 130 and 131: • Exchange rate policy may not be
Page 132 and 133: economic growth, a fall in demand-d
Page 134 and 135: Illustration:Assumptions:• Only t
Page 136 and 137: (18) 2011 DHS Prelim H2 Paper Q1Sin
Page 138 and 139: Singapore does not specialise c
Page 140 and 141: As output increases, real national
Page 142 and 143: oooHigh level of integration in
Page 144 and 145: 2010 IJC Prelim 2010 H2 Paper Q6(a)
Page 146: à growing affluence àrise in dema
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