CJC H2 Prelim Paper 2 QP + SAMS For sharing

© Catholic Junior College 9570/02 JC 2 PRELIMINARY EXAMINATION/2023 CATHOLIC JUNIOR COLLEGE JC2 Preliminary Examination Higher 2 ECONOMICS 9570/02 Paper 2 12 September 2023 Additional Material: Answer Booklet 2 hours 30 mins READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper, ask the invigilator for a continuation booklet. Answer three questions in total, of which one must be from Section A, one from Section B and one from either Section A or Section B. Start a new question on a fresh page. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 3 printed pages and 1 blank page.

2 © Catholic Junior College 9570/02 JC 2 PRELIMINARY EXAMINATION/2023 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1. Since the pandemic hit, many gaming console companies were affected by supply chain disruptions and found themselves short on component parts . A t the same time, consumer demand for gaming consoles also surged in 2021 when vaccines became available. These developments have resulted in a shortage of computer chips used in gaming consoles and car production. Source: Various (a) Explain why there is a shortage in computer chips, and how it affects the market for gaming consoles. [10] (b) Discuss the impact the supply chain disruptions are likely to have on consumers of gaming consoles and its related products. [15] 2. Information failures exist in the healthcare and insurance markets. In the management of this issue, Singapore introduc ed co -payment in its health insurance system to encourage everyone to exercise responsibility and make prudent decisions. Effort has also been made to encourage early diagnosis of diseases to improve long-term health. Source: The Straits Times 2021 (a) Explain how the presence of two types of information failures can prevent an efficient allocation of resources. [10] (b) Assess whether government intervention will be effective in dealing with information failure in Singapore’s healthcare and health insurance markets. [15] 3. Governments must continue to play their roles as robust enforcers of competition and consumer protection to keep cost of living low and to protect consumers’ rights. Source: The Guardian 2021 (a) Explain how rational producers make their production decisions and why prices are often higher in less competitive markets. [10] (b) Discuss whether government intervention to increase competitiveness in the market will necessarily improve market outcomes for consumers and the society at large. [15]

3 © Catholic Junior College 9570/02 JC 2 PRELIMINARY EXAMINATION/2023 Section B One or two of your three chosen questions must be from this section. 4. In October 2022, MAS tightened its monetary policy for the fifth consecutive time within 12 months. Although Singapore’s GDP growth was expected to slow, MAS had assessed that a further tightening of monetary policy was needed to help dampen still - elevated inflation and ensure medium-term price stability. Source: mas.gov.sg/news/monetary-policy-statements/ 2023/mas-monetary-policy-statement-14apr23 (a) Explain how inflation could occur during periods of high economic growth as well as during a recession. [10] (b) Discuss the effectiveness of demand -side and supply -side policies in reducing the rate of inflation in all economies. [15] 5. Japan's trade deficit roughly quadrupled to a record $160 billion USD in fiscal year 2022, imports jumped 32.2% from a year earlier, while exports increased 15.5%. Japan had a trade surplus with the United States but a much higher deficit with China. Source: asia.nikkei.com/Economy/ Japan-posts-record-160bn-trade-deficit-for-fiscal-2022 (a) Explain the factors that contribute to an increasing balance of trade deficit. [10] (b) Discuss whether governments should prioritize addressing a balance of trade deficit or a budget deficit. [15] 6. While Singapore continues to sign more Free Trade-Agreements, most recently with the Pacific Alliance, a Latin American bloc of countries, others have retreated to protectionism to boost their economic resilience and self -sufficiency a midst global economic turbulence. Source: Various (a) Explain how the FTA between Singapore and the Pacific Alliance will benefit its domestic firms and macroeconomy. [10] (b) Discuss the view that small and open econom ies like Singapore should retreat to protectionism amidst this period of economic turbulence. [15] END OF PAPER

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5 © Catholic Junior College 9570/02 JC 2 PRELIMINARY EXAMINATION/2023 1. Since the pandemic hit, many gaming console companies were affected by supply chain disruptions and found themselves short on component parts . At the same time, consumer demand for gaming consoles also surged in 2021 when vaccines became availabl e. These developments have resulted in a shortage of computer chips used in gaming consoles and car production. Source: Various (a) Explain why there is a shortage in computer chips, and how it affects the market for gaming consoles. [10] (b) Discuss the impact the supply chain disruptions are likely to have on consumers of gaming consoles and its related products. [15] Part 1(a) Explain why there is a shortage in computer chips, and how it affects the market for gaming consoles. [10] Command Explain why – to give detailed reasons Content • Shortage = Qd > Qs • Impact on market: Equilibrium P and Q Context Context as mentioned in the pre-amble & question Approach R1: Shortage in computer chips R2: Effect on market for gaming consoles (Equilibrium P and Q) R3: Extent of P and Q changes using elasticity concepts Suggested Answer Part Description Rema rks Introduction A shortage occurs when the quantity demanded is greater than the quantity supplied at the market equilibrium price. In this essay, I will look at the reason why there is a shortage in computer chips, establish the relationship between computer chips and gaming consoles, and explain the impacts on the market for gaming consoles. Define Overvi ew Body- R1 R1: Shortage in computer chips When the COVID-19 pandemic hit, productions came to a standstill as people were ordered to stay home to prevent the spread of the disease. This resulted in factories shutting down. Due to expectations of future prospects, producers, including that of computer chips, decided to decrease their production to avoid being stuck with unsold goods. As such, supply decreases, shifting

6 © Catholic Junior College 9570/02 JC 2 PRELIMINARY EXAMINATION/2023 leftwards from S0 to S1. (can also explain that SS remains stagnant) In the following year when vaccines became readily available, consumers were expecting pre -covid resumption of activities, hence the taste and preferences of products, including that of gaming consoles and cars, increased. This led to a rise in demand for gaming consoles and cars, thereby increasing the derived demand for computer chips, which is a key factor input in the production of gaming consoles. Demand for computer chips increases, shifting rightwards from D0 to D1. At the original equilibrium price P0, quantity demanded increases from Q0 to Q2, but quantity supplied falls from Q0 to Q3. Since Qs < Qd, this results in a shortage of Q3Q2. Body- R2 R2: Effect on market for gaming consoles Computer chips is an essential factor input in the production of gaming consoles.