ACJC Domestic Macro Tutorial Worksheet

1 ©ACJC Econs Dept/2024/Domestic Macroeconomic Problems Anglo-Chinese Junior College Department of Economics H2 Domestic Macroeconomic Aims & Problems TUTORIAL WORKSHEET 1 Section A: Discussion Questions • Question 1: Understanding economic growth • Question 2: Understanding unemployment • Question 3: Understanding inflation Section B: Case Studies • Case Study 1: The tale of BRICS (2019 ACJC Term Assessment) • Case Study 2: A Tale of the Two World’s Superpowers (2020 NYJC Prelims) Section C: Essay Questions • Essay Q1: Circular flow of income and impact of government spending on inclusive growth and unemployment • Essay Q2: • Essay Q3: Causes of negative inflation and importance of various macroeconomic aims Note to students: It is very important for your learning that you thoroughly prepare your answers before tutorials. Your tutors may separately assign you modules from the SLS to supplement your understanding of the topic.

2 ©ACJC Econs Dept/2024/Domestic Macroeconomic Problems Question 1: Understanding Economic Growth Extract 1: IMF lowers forecast for Singapore economy to 3.7% growth this year The Straits Times, July 22, 2022 SINGAPORE - The International Monetary Fund (IMF) has cut its economic growth forecast for Singapore, in line with its recent warning that it will downgrade its estimates for the global economy later this month. The IMF said Singapore’s economy will grow at 3.7 per cent this year (2022). The latest estimate is less than the forecast of 4 per cent growth the fund had made in May. The IMF said the pace of growth will be slower this year compared with the 7.6 per cent surge in 2021 as trade-related sectors may moderate amid supply constraints, while recovery in the hardest hit sectors - tourism and aviation-related, consumer-facing and construction - has only just begun. The IMF said growth in Singapore is being driven by pent -up demand as the economy reopens, amid the relaxation of most Covid -19 curbs on mobility. Singapore's skilful containment measures, effective vaccination campaign and decisive policy support helped the economy to recover impressively ." However, the fund warned: "The outlook is subject to significant uncertainty and risks are titled to the downside." Inflation has been driven up by rising domestic cost pressures, as well as external factors such as the war in Ukraine, which has pushed up commodity prices and tightened supply conditions. The IMF said the risks stem mostly from the Ukraine conflict and the related sanctions imposed on Russia, China's growth slowdown, and interest rate hikes in advanced economies to tame inflation. It also said that the threat of vaccine -resistant new Covid-19 variants continues to linger. With the recovery in domestic demand, the IMF said Singapore's current account surplus is expected to decline to 13.2 per cent of gross domestic product in 2022 from 18.1 per cent in 2021. Cur