A LEVEL ESSAY QUESTIONS BY TOPICS (1998-2012)

MICROECONOMICS Topic 1 Central Economics Problems and Resource Allocation TYS N2011 Consumers and producers are generally assumed by economists to be motivated by self-interest. (a) (b) Explain how, according to economists, the pursuit of self-interest can help to address the problem of limited resources and unlimited wants. [10] Assess whether the price mechanism will always allocate scarce resources in the most efficient manner for all goods and services in a market economy. [15] (need market failure concepts)

TYS N2005 (a) Explain two ways in which an economy might move from a point within its production possibility curve (PPC) to a point on it. [10] (b) Discuss the most effective economic policies to move the PPC outwards. [15] TYS N2004 Illustrating your answer with examples, assess the policies that the Singapore government currently adopts to achieve an efficient allocation of resources when externalities are present, and consider whether some new policies should be introduced. [25] TYS N2002 (a) Explain how scarcity, choice and cost are related to the problems of consumers and producers. [12] (b) Assess whether these concepts are of relevance for governments when making macroeconomic policy. [13] TYS N2001 Discuss whether the price system is the best mechanism for the allocation of economics resources. [25] TYS N2000 (a) What is meant by the basic economic problem of scarcity? [12] (b) Discuss whether economic growth solves the problem of scarcity. [13] TYS N1999 Discuss whether it is necessary to have government intervention in order to achieve an efficient allocation of resources. [25] Topic 2 Demand and Supply & Concepts of Elasticity TYS N2012 Most brands of cars are available in different models. A large rise in the cost of car manufacture and a rise in incomes are likely to affect the sales of various models of car in different ways. (a) Explain how elasticities of demand can assist in understanding the effect of each of these changes on the sales volume of different models of car. [12] (b) Compare and contrast the likely combined impact of both these changes on the revenue earned from the sales of different models of car. [13] TYS N2011 Singapore is facing an ageing population issue. By 2030 senior citizens are expected to comprise almost 20% of the population. Using economic analysis, discuss the likely effects of this demographic change on product markets in Singapore. [25] TYS N2010 The price of sugar, an ingredient in many canned soft drinks, dropped dramatically by 32% between July 2006 and October 2008. Healthy living campaigns meant consumers became more aware of the possible health dangers of consuming too much sugar and they switched to diet drinks that do no contain sugar. Discuss how the combination of the fall in the price of sugar and the healthy living campaigns might affect expenditure by consumers on non-diet and diet canned soft drinks. [25] TYS N2009 There have been large changes in the price of crude oil over the past few years. Discuss what determines whether consumers or producers are more likely to bear the cost of these oil price changes. [25]

TYS N2008 Developments in modern technology, such as faster broadband internet connections, portable DVD players, iPods and MP3 players, have had major impacts on the demand for and supply of recorded music and associated products. Assess how the markets involved might be affected by these developments. [25] TYS N2007 In 2005 the rate of Goods and Services Tax (GST) in Singapore rose from 3% to 5%. Incomes rose by approximately 4.5% in 2005. (a) Explain the likely impact of this change in GST on expenditure by consumers on different types of goods. [10] (b) Discuss whether the combined effect of the rise in incomes and the rise in GST is likely to cause the quantities of different types of goods sold to rise or fall. [15] TYS N2005 Discuss how the Singapore government might use the concepts of price elasticity of demand and income elasticity of demand to determine the impact of a fall in exchange rates and a rise on worldwide incomes on the current account of the Singapore balance of payments. [25] TYS N2004 The terrorist attack on New York on 11 September 2001 caused a worldwide recession and an increased fear of flying, both of which severely affected the demand for travel by air. This led to the closure of some of the major airlines in the world. (a) With the aid of the diagrams, explain how the recession and the closure of some of the major airlines of the world affected the market for air travel. [10] (b) Assess the relevance of price elasticity of demand, income elasticity of demand, cross-elasticity of demand and price elasticity of supply, in explaining the effects of these events on the airline industry. [15] TYS N2003 (a) Explain the concepts of price elasticity of demand and income elasticity of demand, indicating why elasticities are different for different products. [12] (b) Discuss how a supplier of a product that is currently fashionable might use both of these concepts in making price and output decisions. [13] TYS N2002 'In a free competitive market, a shortage causes price to rise, a surplus causes price to fall. In some markets this does not happen because a minimum price is fixed by producers.' (a) With the aid of diagrams and examples, explain why prices rise when there are shortages ad fall when there are surpluses. [10] (b) Discuss the factors that a group of companies might consider when deciding to fix a minimum price in a market. [15] TYS N2001 (a) Explain price elasticity of demand and income elasticity of demand. [10] (b) A government is proposing to increase the tax on petrol. Examine the relevance of price elasticity of demand and income elasticity of demand for this proposal. [15] TYS N2000 (a) Explain price elasticity of demand, income elasticity of demand and cross elasticity of demand. [12] (b) In 1998 an airline offered very cheap flights from UK to other parts of Europe. However, the service was not very frequent, tickets could not be booked at agencies but only directly with the airline, and no meals were offered on the flights. Discuss whether the different elasticity concepts could be useful in explaining this airline's pricing policy for its flight. [13] TYS N1999 a) Use the concept of elasticity to distinguish between a normal good and an inferior good. [12] b) Discuss how a knowledge of price elasticity and income elasticity might be of practical use to a firm. [13] TYS N1998 (a) What are the factors that influence the market demand for a product such as mobile telephones. [10] (b) Explain how price elasticity of demand, income elasticity of demand and cross elasticity of demand might be of use to the manager of a company selling mobile telephone. [15]

Topic 3 Cost & Production TYS N2004 (a) Using appropriate examples, explain the difference between internal and external economies of scale. [10] (b) Discuss the view that the profit motive will always lead to a few large firms dominating the market for each and every type of product. [15] TYS N2003 In 2001 there was a world-wide reduction in airline business. Smaller airlines with lower costs and cheaper discount fares suffered less than the high-cost larger airlines such as Air France, Swissair and Lufthansa. (a) Explain why, according to economic analysis, there are benefits from large scale organisations. [12] (b) Discuss to what extent the above extract concerning costs disproves that economic analysis. [13] TYS J1999 In 1997, a merger was proposed between two of the worlds largest telecommunication companies. Analyse the possible effects when a merger of two large companies occurs and discuss why there is sometimes opposition to such mergers. [25] TYS N1998 The Coffee Marketing Board of Uganda controls 50% of the country's export of coffee. Its main asset is a large efficient processing and storage unit located in the heart of an industrial area which enables economies of scale and a consistent superior blend. Discuss the possible benefits of the above arrangement. [25] TYS N1997 (a) Explain how economies of scale affect the production costs of a firm. [13] (b) Economies of scale are said to be beneficial. Does that mean that mergers of small firms should be encouraged? [12] Topic 4 Market Structures TYS N2012 Internet or on-line shopping has grown rapidly in recent years. Low barriers to entry have allowed a wide range of small specialised retail firms to market their products on the internet. At the same time economies of scale have led to small number of large internet retail companies dominating the market for other products. (a) Explain the existence of these two different types of online retailers and which market structure best explains the market behaviour of each of them. [10] (b) Increased specialisation and low barriers to entry have an impact on consumers and existing producers.Discuss how far the traditional analysis of these economic effects applies to the growth of online shopping. [15] TYS N2011 (a) Explain how the different features of monopolistic competition and oligopoly affect the price and output determination in these market structures. [10] (b) Recession will affect firms in different ways depending, for example, on what they produce and the market structure in which they operate. Discuss the likely effects of a recession on different firms. [15] TYS N2010 Retailers in Singapore supply a wide range of services and products in a variety of market structures. (a) Explain the key differences between oligopolistic competition and monopolistic competition. [10] (b) Consider different retailers in Singapore and discuss which of these two market structures best explain their market behavior. [15] TYS N2009 A very popular band is due to play one concert at a 5000 capacity venue. The plan is to charge different prices according to the area in which the seat is located. (a) Explain whether this pricing policy could be considered to be an example of price discrimination. [10] (b) Discuss the problems that are likely to be faced in determining the prices to be charged for the seats. [15] TYS N2008 Firms pricing and output decisions depend on barriers to entry and behaviour of competitors. (a) Explain why barriers to entry are a key determinant of a firms pricing behaviour. [10] (b) Discuss the extent to which the behaviour of firms depends in reality on the actions of their competitors. [15] TYS N2007 (a) Explain how, in economic theory, a monopolist would determine the price that would maximise the profits. [8] (b) Discuss whether firms in the real world set prices at profit-maximising levels. [17]

TYS N2006 (a) Explain what factors affect price and output in an oligopolistic market. [10] (b) Discuss whether this model of market structure is the most appropriate to explain the behaviour of firms in Singapore. [15] TYS N2005 (a) Explain the type of market structure in which each of the following is likely to operate in Singapore: i) Hawker food stalls and ii) 5-star luxury hotels [10] (b) Discuss how a fall in market demand for hotel accommodation is likely to affect both 5-staf luxury hotels and other types of hotel. [15] TYS N2004 (a) Using appropriate examples, explain the difference between internal and external economies of scale. [10] (b) Discuss the view that the profit motive will always lead to a few large firms dominating the market for each and every type of product. [15] TYS N2002 (a) Explain what is meant by productive and allocative efficiency. [12] (b) A firm should be encouraged to maximise profits because this makes the firm efficient. Assess whether this argument is true for a firm operating in an imperfect market. [13] TYS N2002 In the UK, train tickets may be obtained more cheaply if they are bought in advance. In August 2000 the railway companies jointly announced that these cheap tickets would be available only at major stations. Passengers living near smaller stations would, therefore, have to pay the full cost of the ticket. (a) Explain what is meant by price discrimination and discuss whether this is an example of price discrimination. [10] (b) Identify the type of market structure that enables companies to practise price discrimination, and discuss whether that market structure is ever beneficial to consumers. [15] TYS N2001 (a) Explain how monopolies can discriminate between buyers by charging different prices for the same product or service. [10] (b) Discuss the circumstances in which a monopoly could be beneficial. [15] TYS N2001 (a) Contrast the features of perfect competition with those of oligopoly. [10] (b) Discuss why oligopoly is a more common market structure than perfect competition. [15] TYS N2000 In 1998 two petrol companies, Shell and Texaco, stated that they proposed to co-operate with each other to bring greater efficiency in a competitive market. (a) Distinguish productive efficiency and allocative efficiency. [10] (b) Discuss what advantages and disadvantages might occur when large companies in the same industry cooperate with each other and the industry becomes more monopolistic. [15] TYS N2000 Many companies, recognising the increase in environmental awareness among consumers, now advertise that they have invested in research to ensure that their products are environmentally friendly. They hope that this will increase the demand for their products and lead to higher profits. (a) Explain the difference between fixed and variable costs and suggest what might happen to the fixed and variable costs in the above companies in the short run. [12] (b) Discuss whether the above statement supports the view that it is producer who dictates what happens in the market with the sole aim of maximising profits. TYS N1999 (a) What are the main characteristics of a monopoly market? [12] b) To what extent is it true that monopolies are bad for the consumers? [13] TYS J1999 (a) Distinguish between monopolistic competition and oligopoly. [12] (b) Explain why oligopoly is a common market structure in many economies. [13]

TYS N1998 In August 1996, for what was thought to be the first time in the African sub-continent, a private company was contracted by the government to manage electricity Distribution in Northern Namibia. (a) Explain why governments throughout the world have been involved in the supply of services such as electricity. [12] (b) Discuss whether economic efficiency is likely to be improved by the provision of such services by a private company. [13] TYS N1995 (a) With reference to the characteristics of market structure, explain why a video rental shop is an appropriate example of monopolistic competition and the car manufacturing industry is an appropriate example of oligopoly. [12] (b) Discuss how these businesses might compete in their respective market structures. [13] Topic 5 Market Failure TYS N2012 University education in Singapore throughout the rest of the world is subsidized by national governments rather than left to market forces. During 2010, several governments announced that these subsidies would be cut, stating the need to reduce large fiscal budget deficits as the reason. Explain why countries subsidize university education and discuss whether reductions in subsidies are justified. [25] TYS N2010 (a) Explain why government intervention is advocated in the markets both for public goods and for goods where externalities are present. [12] (b) In the UK, entry to national museums and art galleries is free of charge and tickets to see the opera are heavily subsidized. In contrast, in Japan, entry to museums and art galleries comes at a high price and a ticket to see opera is among the most expensive in the world. Assess the economic case for these two different approaches. [13] TYS N2009 Governments around the world protect consumers against market failure due to market dominance. (a) Analyse, with supporting examples, how market dominance might lead to market failure. [10] (b) Assess the extent to which market dominance, rather than any other potential market failure, is the major cause of government intervention in the markets for goods and services within Singapore. [15] TYS N2008 (a) Explain why imperfect information and immobility of factors of production may lead to market failure. [10] (b) Evaluate policies currently used by the Singapore government to correct these causes of market failure. [15] TYS N2007 With reference to examples, discuss whether there is a need to change the current policies adopted by the Singapore government to deal with market failure caused by externalities. [25] TYS N2006 Discuss, with economic reasons to support your arguments, whether the Singapore government currently adopts the most appropriate economic policies in the provision of education. [15] TYS N2005 (a) Explain why pollution and congestion caused by cars are likely to cause market failure. [10] (b) Discuss whether the Singapore government currently adopts appropriate policies to overcome this market failure. [15] TYS N2004 Illustrate your answer with examples, assess the policies that the Singapore government currently adopts to achieve an efficient allocation of resources when externalities are present, and consider whether some new policies should be introduced. [25]

TYS N2002 (a) Use examples to distinguish between (i) a private good and public good (ii) a social cost and a negative externality. [12] (b) 'In March 2000 Hong Kong's air pollution index was the highest it had ever been. Clouds of thick yellow smog remained a fixture of the city's skyline' [Far Eastern Economic Review, 11 May 2000] Discuss what economic policies might be used to deal with this situation. [13] TYS N2001 In Indonesia during 1999 plantation companies cleared huge areas of the rain forest for rubber production and caused large fires, choking people and killing some endangered species of animals. A state emergency was declared as air pollution reached dangerous levels. Discuss how economic analysis could find a solution to prevent these problems happening again. [25] TYS N2000 It was reported that in Egypt private sector companies were being offered the chance to invest in the development and operation of airports and roads. (a) Explain and illustrate what is meant by (i) an externality, (ii) a public good, and (iii) a private benefit. [12] (b) Discuss whether the above concepts are of any use in explaining why it is often the government and not private enterpise that is responsible for the development and operation of airports and roads. [13] MACROECONOMICS Topic 6 NIA TYS N2012 (a) How do economists compare the economic performance of different countries? [10] (b) Assess the extent to which Singapores economic performance is the main determinant of its populations standard of living. [15] TYS N2011 The 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] TYS N2009 Economic measures of the Singapore economy for 2007 indicate that GDP was S$243 billion. The current account on 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] TYS N2003 It was reported in October 2001 that industry in Singapore was facing a sharp recession. GDP grew by 10% in 2000, but in 2001 it was predicted to decline. The Singapore Chamber of Commerce petitioned the government for reductions in personal and corporate tax rates. (a) Explain what might happen to national income if a government were to reduce personal and corporate tax rates. [10] (b) Discuss whether the decline in GDP mentioned above necessarily meant that the standard of living for the average person in Singapore also sharply declined. [15] TYS N2001 It was reported that in the last 10 years there has been an improvement in the standard of living of the average person in Namibia. (a) If you were asked an economist to show that the average person in Namibia is better off than ten years ago, explain what information your would need. [12] (b) Comment on the difficulties of comparing living standards between countries. [13]

TYS N2000 (a) Explain how the three concepts National Output, National Income and National Expenditure can have identical values although measured in different ways. [10] (b) How useful are measures of GDP for indicating changes in living standards within a country? [15] TYS N1999 Calculations of Gross National Product (GNP), especially in developing countrises, are largely guesswork and, even if they were accurate, GNP can be a very poor measure of welfare. Discuss the problems for a developing country of measuring its GNP and interpreting these statistics. [25] TYS N1995 The Singapore economy grew by 9.2% per annum in the 3rd quarter of 1993, inflation was 2.4% per annum and 19 000 jobs were created. (Straits Times, 13 Nov 1993) How far can this information lead you to conclude that there is a rising standard of living in Singapore? [25] Topic 7 NID (Focus will be on multiplier) TYS N2011 (a) 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] TYS N2009 (Cross topics) The 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 USA. [15] TYS N2004 (a) Explain what determines the size of the national income multiplier. [10] (b) To what extent might other macroeconomic problems result from the use of fiscal policy that is designed to reduce unemployment in an economy? [15] TYS N2002 (a) Assume there is an open economy with a government sector. Explain the conditions for equilibrium in the circular flow in such an economy. [10] (b) Discuss how an increase in injections may affect the equilibrium level of national income. [15] TYS N1999 (a) Explain what is meant by the equilibrium level of national income. [10] (b) Analyse the effect on the equilibrium level of national income of (i) an increase in the level of saving and (ii) an increase in the level of exports. [15] Topic 8 Public Finance and Fiscal Policy TYS N2010 The recent worldwide recession caused many governments to re-assess their use of fiscal policy in order to stimulate their stagnating economies. (a) (b) Explain what would reduce the effectiveness of fiscal policy as a stimulus to the Singapore economy. [10] Assess alternative policies that might be more appropriate in managing the Singapore economy when faced with a worldwide recession. [15]

TYS N2007 (a)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] TYS N2004 (a) Explain what determines the size of the national income multiplier. [10] (b) To what extent might other macroeconomic problems result from the use of fiscal policy that is designed to reduce unemployment in an economy? [15]

TYS N2001 Keyness solution to unemployment was higher public spending which through multiplier process would generate income and more jobs. (a) Explain how this solution works. [12] (b) Are there any other solutions to the problem of unemployment? [13] TYS N1996 In recent years some government have relied increasingly on indirect taxation rather than direct taxation in their budgets. (a) Distinguish between these two types of taxes. [8] (b) Discuss the advantages and disadvantages of a switch towards a greater reliance on indirect taxation. [17] Topic 9 Interest Rate and Monetary Policy TYS N2012 During 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] TYS N2010 When there are large increase in the prices of oil and other primary products, they are usually expected to lead to rising inflation throughout the worlds economies. Discuss the extent to which these factors are likely to affect the rate of inflation in Singapore. [25] TYS N2006 The annual inflation rate in Singapore rose from 0.5% in 2003 to 1.7% in 2004. (a) Explain how monetary factors can cause inflation. [10] (b) Discuss whether an increase in the rate of inflation is more likely to cause problems for the domestic or the external sector of the Singapore economy. [15] TYS N2005 Between 2000 and 2003 interest rates fell to record low levels in many advance countries of the world. (a) Explain the likely reasons why interest rates fell to record low levels in many advanced countries of the world. [10] (b) Discuss the likely impact of this fall in interest rates on the Singapore economy. [15] TYS N2004 (a) Explain how changes in the money supply might affect the general level of prices in an economy. [10] (b) Discuss the view that monetary policy is the best method of controlling inflation in an economy. [15] TYS N2002 Discuss the consequences for an economy of an increase in interest rates. [25] TYS N2001 Discuss the effect that a rise in interest rates in a country might have on consumers, producers and international financial speculators. [25] TYS N2000 Discuss how a significant fall in the level of interest rate might affect the components of aggregate demand. [25] TYS J1998 In the UK, the growth of retail sales in the year ending June 1996 was higher than expected. As a result, it was suggested that the Chancellor should consider raising interest rates to prevent inflation. (a) Would you support the implication of this statement that inflation is caused by consumer spending? [12] (b) Discuss whether interest rates alone are likely to be an effective method of controlling inflation. [13]

Topic 10 Economic Growth and Supply-side Policies TYS N2011 In 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] TYS N2008 Discuss the most appropriate policies that a government could adopt to encourage both actual and potential growth. [25] TYS N2006 In the fourth quarter of 2004 Singapores unemployment rate rose to 3.7%. Discuss whether supply-side policies are the best way of achieving full employment in Singapore. [25] TYS N2005 (a) Explain two ways in which an economy might move from a point within its production possibility curve (PPC) to a point on it. [10] (b) Discuss the most effective economic policies to move the PPC outwards. [15] Topic 11 Macroeconomic objectives/polices/conflicts TYS N2012 Governments 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] TYS 2008 Discuss the relative significance of the multiplier, the price elasticities of demand for imports and exports, and crowding-out in influencing macroeconomic policy decisions. [25] TYS N2005 Discuss the possible impact of world-wide recession on Singapore and the policy options that the government could adopt to reduce the most harmful effects of this impact. [25] TYS N2003 Explain the key macro-economic aims of the Singapore government, and discuss which policy measures might best be used to overcome the most significant macro-economic problem that is currently being experienced by the Singapore Economy. [25] TYS N2002 A government's macroeconomic aims are low inflation, low unemployment, balance of payments equilibrium and economic growth. Which of these aims do you consider most significant for Singapore and why? [25] TYS N2001 (a) Explain what causes inflation. [10] (b) Discuss whether a low rate of inflation should be the economic priority of a government. [15] TYS N2000 Full employment should be the macroeconomic priority of a government. (a) What are the difficulties of defining full employment? [10] (b) Discuss the conflicts that may arise between the pursuit of full employment and other macroeconomic policy objectives. [15] TYS N2000 A rise in the price of a major commodity such as oil benefits the producing country in the short run but causes serious problems in the oil-importing countries. In the long run everyone is worse off. (a) Explain the possible short-run consequences of a rise in oil prices. [13] (b) Discuss the validity of the above statement with regard to the long run. [12]

TYS N1999 (a) In recent years, the rate of inflation in many countries has been low. Suggest possible reasons why an inflation rate may be low. [12] (b) Discuss what policy measures a government may adopt if the rate of inflation were to become unacceptably high. [13] Topic 12 International Trade and Globalisation TYS N2010 There is a general consensus among economies 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] TYS N2009 (Cross topics) The 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 USA. [15] TYS N2009 An economist stated The trend towards globalization leaves no room for protectionism. (a) Account for the trend towards globalization. [10] (b) Discuss whether you agree with the economists view. [15] TYS N2008 (a) 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. [15] TYS N2007 (a) Explain the potential causes of 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] TYS N2007 Discuss whether Singapore is among the economies that have most to gain from globalisation. [25] TYS N2006 In October 2005 the Monetary Authority of Singapore stated that its policy of allowing the Singapore dollar to strengthen against a basket of currencies would be maintained. (a) Using a diagram, explain what might cause a countrys exchange rate to appreciate in a floating exchange rate system. [10] (b) Discuss the extent to which problems are likely to result from an appreciation of Singapores exchange rate. [15] TYS N2005 Discuss how the Singapore government might use the concepts of price elasticity of demand and income elasticity of demand to determine the impact of a fall in exchange rates and a rise in worldwide incomes on the current account of the Singapore balance of payments. [25] TYS N2004 Many countries need to import raw materials and component parts, which become more expensive if the value of their currency falls against the currencies of other countries. To what extent have the main macroeconomic problems faced by Singapore in recent years been caused by a weakening of the exchange rate? [25] TYS N2003 For many years the USA did not conduct normal trading relations with Vietnam. In 2001 a trade agreement was signed between the two countries which reduced tariffs, encouraged foreign direct investment and opened up export markets. (a) How does the theory of comparative advantage explain why a developed country such as the USA might wish to trade with a developing country such as Vietnam? [12] (b) Discuss what effect such a trade agreement might have on the economies of the participating countries.[13]

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TYS N2002 Specialisation and international trade have meant that some countries enjoy higher living standards than others. (a) Explain why specialisation occurs. [12] (b) Discuss whether protection offers any advantages over specialisation [13] TYS N2001 (a) What might cause an appreciation of a floating exchange rate? [10] (b) Discuss whether an appreciation of a countrys exchange rate will always be beneficial to that country. [15] TYS N2001 Discuss the effect that a rise in interest rates in a country might have on consumers, producers and international financial speculators. [25] TYS N2000 (a) Explain the theory of comparative advantage. [10] (b)To what extent does this theory explain the pattern of trade between Singapore and the rest of the world? [15] TYS N2000 Discuss the economic information about another country that would be useful to a company which is considering exporting its products to that country. [25] TYS N1999 Explain why governments are sometimes concerned about the level of exchange rate of their country's currency and discuss what policies they might adopt to influence the exchange rate. [25] TYS J1998 In 1996, it was anticipated that South African exports should receive a considerable boost from a weaker exchange rate and the expected increase in world growth. (a) Explain the above statement. [10] (b) Discuss the policy options that are available to a government to deal with a balance of trade deficit. [15] TYS N1997 It was reported that Thailand had a current account deficit on its balance of payments which it wanted to reduce. The governments policy aim was to boost domestic savings to try to support economic expansion and improve competitiveness. In which circumstances would this policy achieve its objective. [25] TYS N1995 (a) Explain what is meant by the terms of trade and why it is an important economic statistics. [12] (b) What are the possible causes and consequences of a deterioration in the terms of trade of a developing country producing primary products? [13] TYS J1995 (a) Discuss what might cause a current account deficit in the balance of payment. [10] (b) Comment on the policies available to a government faced with a current account deficit. [15] TYS N1991 (a) How may a country try to restrict imports? [8] (b) Explain and evaluate the economic reasons for trying to restrict imports. [17]

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