Key Economic Indicators and Standard of Living

N09Economic measures of the Singapore economy for 2007 indicate that GDP was S$243 billion. The current account of the balance of payments was S$59 billion in surplus.a. Explain how you might use GDP and balance of payments data to measure the performance of an economy. [12]b. Assess whether these economic indicators are the best measures of economic performance and standard of living in Singapore. [13]

N12a. How do economists compare the economic performance of different countries? [10]b. Assess the extent to which Singapore’s economic performance is the main determinant of its population’s standard of living. [15]

Macroeconomic Aims, Issues and Policies

N07a. ‘To be considered successful, an economy needs to achieve low unemployment, low inflation and stable economic growth.’ Explain this statement. [12]b. Discuss whether fiscal policy is the most effective way for Singapore to sustain a successful economy. [13]

N07a. Explain the potential causes of a balance of payments deficit on current account. [10]b. Discuss which measures, if any, a government should adopt when confronted with a current account deficit. [15]

N08Discuss the most appropriate policies that a government could adopt to encourage both actual and potential economic growth. [25]

N08Discuss the relative significance of the multiplier, the price elasticities of demand for imports and exports, and crowding-out in influencing macroeconomic policy decisions. [25]

N09The relative importance of the components of the circular flow of income for a small and open economy, such as Singapore, is likely to be different from a large and less open economy, such as the USA.

a. Explain this statement. [10]b. Assess whether a change in the external value of its currency is more likely to have a larger impact on Singapore or the USA. [15]

N10The recent worldwide recession caused many governments to re-assess their use of fiscal policy in order to stimulate their stagnating economies.

a. Explain what would reduce the effectiveness of fiscal policy as a stimulus to the Singapore economy. b. Assess alternative policies that might be more appropriate in managing the Singapore economy when faced with a worldwide recession. [15]

N10When there are large increases in the prices of oil and other primary products, they are usually expected to lead to rising inflation throughout the world’s economies.

Discuss the extent to which these factors are likely to affect the rate of inflation in Singapore. [25]

N11a. Explain the process whereby an increase in government expenditure can lead to a bigger change in national income. [10]b. Discuss the extent to which conflicts in government macroeconomic objectives limit the scope for the use of fiscal policy in any economy. [15]

N11In the study of macroeconomics, investment can take many forms including foreign direct investment, fixed capital investment and investment in human capital.

a. Explain what is meant by these different types of investment. [10]b. Discuss how far supply-side policies can be used to stimulate these different types of investment. [15]

N12Governments generally face trade-offs between different macroeconomic policy objectives. Discuss how far a government’s macroeconomic policy decisions when faced with these trade-offs are affected by the extent to which the economy is open. [25]N12During 2009 the Bank of England engaged in what is known as ‘quantitative easing’ by pumping more than £200 billion into the economy. Record low levels of interest rates have also been maintained within the UK economy. Quantitative easing and low interest rates were also adopted by the US.

a. Explain why exchange rates rather than interest rates are the preferred choice as the instrument of monetary policy in Singapore. [10]b. Discuss the likely impact on the Singapore economy of quantitative easing and low interest rates in the US and the UK. [15]

International Economics

N07 Discuss whether Singapore is among the countries to have the most to gain from globalization. (25)

N08a. Explain the determinants of the pattern of trade between Singapore and the rest of the world. (10)b. Discuss whether the Singapore government should change its policies for managing the balance of payments.

N09An economist stated ‘The trend towards globalisation leaves no room for protectionism’.

a. Account for the trend towards globalization. (10)b. Discuss whether you agree with the economist’s view. (15)

N10There is a general consensus among economists that protectionism is a bad thing.a. Explain why protectionism exists. (8)b. Assess the extent to which the Singapore government’s approach to international

trade may need to be adjusted in response to a growth in worldwide protectionism. (17)

N11The Singapore economy is open to the world, in trade and investment. This is both a matter of policy and necessity because of our size and limited resources. In 2008, our trade to GDP ratio was 360%, the highest in the world.’

(Ministry of Trade and Industry, Singapore, 2009)

Discuss whether the openness of the economy is beneficial or harmful to the standard of living in Singapore. (25)