Suggested Answers of BT2 Revision Package - ASKnLearn

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economic growth, a fall in demand-deficient unemployment. This would also reducedemand-pull inflation. A gradual appreciation of the S$ would keep the price of imports lowand this would be important due to Singapore’s importdependence. This would keep cost of production of producers in Singapore low and hence,this keeps cost push inflation low.Knowledge, Application, Understanding and AnalysisL3L2L1Clearly supports with appropriate reasons why Singapore chooses exchangerate over interest rate as a monetary policy Answer shows depth.Some reasons were given on Singapore’s choice of monetary policy but maylack substantiation.Scanty description of reasons on Singapore’s choice of monetary policy butlacks depth.7 – 105 – 61 – 4(b) Assess the impact of the revaluation and the changes made to the currency’strading band on the Singapore economy.[15]A revaluation of the S$ refers to the increase in the value of the S$ brought about throughintervention by the government i.e. purchase of S$. The government sought a gradualappreciation of the S$ that would bring about internal and external effects on the Singaporeeconomy. The external effects of the revaluation of the S$ and the steepening and wideningof the currency’s trading band include an improvement in the balance of trade and in turn,cause the balance of payments to improve.Price of imports will fall and this translates into lower costs of production i.e. lower importexpenditure as quantity demanded of imports will increase less than proportionately due toSingapore’s import dependence. Lower costs of production translates into lower prices ofexports that will offset the increase in price of exports due to the revaluation and hence,BOT improvesIn addition, the improvement in net exports would result in an increase in aggregate demand(AD) and hence, cause national income to increase via the multiplier effect and result in theincrease in actual economic growth.An additional internal effect of the revaluation would be demand-pull inflation. Demand-pullinflation would result when the economy is near full employment and hence, the increase inAD would cause an escalation in prices. Any increase in national income may be purelynominal and hence, there might then be a fall in real national income levels. In addition,demand deficient unemployment would decrease.
The steepening and widening of the currency’s trading band would allow Singapore to curbcost-push inflation in the long term to allow for an exchange rate appreciation to alleviate therising price of imports. An appreciation of exchange rates would allow Singapore torebalance its economy in the longer term due to increased economic challenges from theglobal economy and amidst rising prices of inputs.Knowledge, Application, Understanding and AnalysisL3L2L1For an answer that explores positive and negative impacts on the Singaporeeconomy. Answer exhibits depthFor an answer that tends to explore a balanced view of the impacts butanswer may show limited depth.For an answer that is limited in its substantiation. Answer tends to be onesided.9 – 116 – 81 – 5Allow up to 4 additional marks for EvaluationE2 For a judgment based on economic analysis / adequately substantiated 3 – 4E1For an unexplained judgment, or one that is not supported by economicanalysis.1 – 2(17) 2010 ACJC Prelim 2010 H2 Paper Q6 (only part a)Suggested answera. Explain the economic basis for specialization and free trade. [10]1. Why do countries trade?2. Economic concepts: Comparative Advantage & Terms of Trade.3. Benefits of Free trade.1. Why do countries trade?• Due to differences in demand and supply conditions, countries specialize. Explain theTheory of Comparative Advantage, opportunity cost and terms of trade to illustrate thegains from trade and the benefits from trade.• The Principle of Comparative Advantage gives a theoretical explanation to theappropriate pattern of specialisation based on efficiency among countries.Based on‘comparative advantage’ principle, the pattern of specialisation is based onopportunity cost. In spite of absolute advantage in all goods, the opportunity cost ofeach good is likely to differ and this country should produce/specialise in goods inwhich the opportunity cost is lowest.
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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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EvaluationE2For a reasoned judgemen
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LevelsL3(7m - 10m)L2(5m - 6m)L1(1m
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Subsidies to ConsumersWith governme
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Page 134 and 135: Illustration:Assumptions:• Only t
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Page 140 and 141: As output increases, real national
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Page 144 and 145: 2010 IJC Prelim 2010 H2 Paper Q6(a)
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