2023 HCI Prelim Paper 1 QP Final

1 © Hwa Chong Institution 2023 9570/01/A/C2 Prelim 2023 HWA CHONG INSTITUTION C2 Preliminary Examinations Higher 2 CANDIDATE NAME CT GROUP 22 ECONOMICS Paper 1 Case Study Questions Additional Materials: Answer Booklet 9570/01 25 August 2023 2 hours 30 minutes READ THESE INSTRUCTIONS FIRST Read all instructions printed on the cover page of the 12-page answer booklet carefully. Write all your particulars clearly on the cover page of the 12-page answer booklet. Write in dark blue or black pen on both sides of the paper. You may use a soft HB pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid and tape. Answer ALL questions. Write all your answers in the 12-page booklet and subsequent 4-page booklets (if required). Do all your rough work in pen using the answer booklet and cross it through without making it illegible. Do not tear out any part of this booklet. Begin case study question 1 and question 2 on a new page within the answer booklet. All work must be handed in. If you have used any ad ditional 4-page booklets, please insert them inside the 12–page answer booklet. The number of marks is given in brackets [ ] at the end of each question or part question. You may use a calculator. You are advised to spend several minutes reading th rough the questions before you begin writing your answers. You are reminded for the need for good English and clear presentation in your answers. This document consists of 8 printed pages. [Turn over

2 © Hwa Chong Institution 2023 9570/01/A/C2 Prelim 2023 Answer all questions Question 1: Coronavirus (COVID-19) – Immediate impact and beyond Extract 1: Challenges faced by Boeing and Airbus The COVID-19 pandemic has created disruptions in the air travel and aircraft manufacturing industry amidst widespread travel restrictions and travellers’ fear of infection. Even as sale of tickets plunge, aircraft manufacturers have had to readjust their production. For example, Airbus has reduced output from 60 to 40 a month. Similarly, Boeing has announ ced cuts to production. China, desperate to become a power in commercial aerospace, may see the disruption as a way to speed up entry into the global market, says Robert Spingarn of Credit S uisse, a bank. He speculates that Brazil’s Embraer might merge with China’s COMAC to build a p lane capable of competing against Airbus and Boeing. The Brazilians could supply the industrial knowhow and the Chinese the industrial might. The nature of the aircraft manufacturing industry is that it involves significant costs. For instance, an aircraft manufacturing firm would need to incur costs to build factories, assembly lines, hangars and testing facilities. It also has to incur costs to buy metals, composites, plastics and other specialised parts besides employing a huge number of workers. T he coronavirus has already impacted the demand for aircrafts. Now Airbus and Boeing are con cerned about the potential entry of Embraer and COMAC into the aircraft manufacturing industry. Source: Adapted from The Economist, 1 Aug 2020 Extract 2: Cannabis is harmful to society although it may revive the tourism industry There has been a lot debate whether recreational ca nnabis should be permissible. Although it is legalised in some countries, it has caused a lot of controversies especially since the COVID-19 pandemic. In the United States (US), the recreational use of cannabis has been legalised in 23 states, three US territories, and District of Columbia, typically fo r adults aged 21 and above. Travel has been an ordeal since the arrival of COVID-19 but some analysts said that recreational cannabis could revive the tourism industry. A 2020 report found that 29 p ercent of all active leisure travellers want to do cannabis-related activities on vacation. With worldwide sales expected to hit $55.9 billion by 2026, a hospitality publication suggested that hotels can’t afford to ignore the growing interest in cannabis use. Cannabis is illegal to possess, grow, distribute or sell in the United Kingdom (UK). The maximum penalty for possession of cannabis, even if it is meant for recreational use, is five years in prison and an unlimited fine. Cannabis is thought to be the most widely used illegal drug in the UK. While it can lead to feelings of relaxation, happiness and sleep iness, many experts say the drug is not the harmless "natural" high some claim it to be. In som e cases, it can increase anxiety and paranoia, lead to confusion and even hallucinations, according to the Royal College of Psychiatrists. Beyond this, regular cannabis use increases the risk of de veloping psychotic illnesses, such as schizophrenia, particularly in adolescents, says an expert from King's College London. “For some people, they end up having problems with relationships. It impacts on their ability to function at work and school," according to a professor of psychopharmacology at the University of Exeter. They are often tired and fall sick frequently, affecting the ir ability to work well in a team. At work, the low attendance rate has a negative impact on their work performance. At home, they may turn aggressive towards their family members due to mood swings, especially when they run out of money to buy cannabis. Source: Various

3 © Hwa Chong Institution 2023 9570/01/A/C2 Prelim 2023 Table 1: Percentage change in total number of drug offences in England and Wales from 2019 to 2020 Source: Office for National Statistics, Crime in England and Wales Extract 3: Uneven effects of the pandemic on OECD 1 countries The speed of the economic bounce-back from the enor mous recession of 2020 has taken many forecasters by surprise. Output across the 38 mostl y rich OECD countries combined probably surpassed its pre-pandemic level a few months ago. The average unemployment rate across the club, at 5.7%, is in line with the post-war average . And aggregate household income, adjusted for inflation, is above its pre-covid level. The overal l picture has been remarkably benign, even as several variants of the coronavirus have emerged. But it hides stark differences beneath. Some countries always looked vulnerable to travel b ans and a collapse in services spending—in particular those in southern Europe, which rely heavily on tourism. Other places, including Belgium and Britain, suffered high levels of COVID-19 infec tions and deaths, which limited consumer spending. In some countries, especially those where the impact of the virus was relatively slight, labour markets did not suffer too much, allowing people to continue to earn. Japan’s unemployment rate has barely budged since the pandemic began. By contrast, Spain ’s rate rose by three percentage points between February and August 2020. Some governments more than made up for people’s los t labour income by sending them vast amounts of money. That was America’s strategy: alth ough unemployment soared as the economy locked down, households received more than $2 trillion in government transfers in 2020 and 2021, in the form of topped-up unemployment benefits and stimulus cheques. Canada did something similar. Other countries, however, such as the Balt ics, focused their fiscal firepower on protecting firms’ cashflow or expanding health-care capacity. Austria and Spain seemed to neither preserve jobs nor compensate the losers: in both countries real household income is still around 6% below its pre-pandemic level. What about companies? Stock market performance hint s at their health, as well as a country’s attractiveness to foreign investors