CJC H2 Prelim 2024 P1 QP

CATHOLICJUNIORCOLLEGEJC2PreliminaryExaminationHigher 2 ECONOMICS 9570/01 Paper1 22August 2024 NoAdditional Materialsarerequired. 2hours30minutes READTHESEINSTRUCTIONSFIRST Ananswerbookletwill beprovidedwiththisquestionpaper.Youshouldfollowtheinstructionsonthefrontcoveroftheanswerbooklet. Ifyouneedanadditional answerpaper,asktheinvigilatorforacontinuationbooklet. Answer allquestions. Thenumberofmarksisgiveninbrackets[]attheendofeachquestionorpartquestion. Thisdocumentconsistsof 8printedpages. [Turnover©CatholicJuniorCollege 9570/01JC2PRELIMINARYEXAMINATION/2024

2 Question1: Security, sustainability, andcompetitioninthefoodindustry Extract 1: Fertiliser suppliesandthreateningglobal foodsecurity The war in Ukraine is having a major impact on the global supply of agricultural fertilisers,potentiallyunderminingfoodsecurityaroundtheworld. Russia, together withBelarus,isoneofthe world’slargest sourcesof mineral fertilisers. After Russia’sinvasionof UkraineinFebruary2022, many nations, including the United States and the European Union (EU), imposedsanctions on the country. Although there were specific exemptions in thesanctionsregimetopermit Russian and Belarus to continue to supply fertilisers, exports have fallen foul of othermeasuresdesignedtoisolatetheregion. Russiasaidthat itsfertiliser wasbeingpreventedfromreachingcustomersintheglobal south.ShortageshavebeencompoundedbyexportrestrictionsimposedbyChina,whichaccountsfor30% of global phosphate fertiliser supplies. Because of measures to protect its domesticmarket,China’sexportsshrunkby50%in2022,theWorldBanksays. TheWorldEconomicForum’s2023Global RisksReportrankedaloomingfoodsupplycrisisasoneof thetopfour threatsfacingtheworld, predictingthat thelaggedeffect of apricespikeinfertiliser wouldhit foodproductionacrosstheworldin2023, oncethestocksoffertilisersattheprevioustransactedlowerpricewindup. Source: Adaptedfromhttps://www.weforum.org1March2023 Figure1: Fertiliser PriceIndex ©CatholicJuniorCollege 9570/01JC2PRELIMINARYEXAMINATION/2024

3 Figure2: Wheat price($per bushel) Source: TheFinancial Times, 21March2022 Extract 2: Excessfertiliser usesanditsenvironmental impact Fertilisers have transformed the way the world produces food. Beyond largebenefitsfor foodsecurity, they also bring environmental benefits through higher yields (andthereforelesslanduse). But therecanbeadownside. Whenweoverapplyfertilisers–nomatterwhethertheyarenatural ones like manure or synthetic fertilisers – excess nutrientsarewashedoff andpollutethenatural environment. Nitrogen andphosphorusarethetwomainfertilisersthat farmersaddtotheir fields. Researchpresented here shows that nearly two-thirds of the nitrogen we use on our crops becomes apollutant; morethanhalf of appliedphosphorusdoes. Therearelargedifferencesinhowmuchpollution countries generate through their agricultural practices. Some produce almost none;othersproducehundredsofkilogramsperhectareofcropland. Source: Adaptedfromourworldindata7Sept 2021 Extract 3: China’s Luckin Coffee makes Singapore debut at Marina Square, Ngee AnnCity China’sgiant coffeechain, LuckinCoffee, madeitsdebut inSingaporewithadoubleshot:Twostores – at Marina Square and Ngee Ann City – opened on Friday, with more in the works.NicknamedtheStarbucksofChina,thebrandhasmorethan8,000storesinitshomecountry. ©CatholicJuniorCollege 9570/01JC2PRELIMINARYEXAMINATION/2024

4 Singapore is the first market in its overseas expansion. Singapore was picked for its“maturecoffeeconsumermarket”withpeoplewhodrinkcoffeedaily,addsthespokesman. Luckin Coffee sets itself asadisruptor withitsuseof bigdata, aswell asmobileorderingandcashlesspayment viaitsmobileapp, saysthebrand’sspokesman. Thiseliminatestheneedtoqueueif ordersareplacedinadvance.Thecoffeebeans,roastedinChina,aresourceddirectlyfromcoffee farms in Yunnan province, Colombia, and Ethiopia. Newproducts tailored for theSingaporemarketwill berolledoutinthefuture. Founded in 2017, Luckin Coffee burst onto the Chinese coffee scene to challengeStarbucksthrough affordable coffee options and mobile ordering. China is Starbucks’ second-largestmarket after the U.S. Luckin Coffee grew to 10,829 stores in China at the end of June,surpassingStarbucksasthelargestcoffeechainbrandinthecountryfollowingwhatoneanalystcalls an “aggressive” expansion. In comparison, Starbucks operated 6,480storesinmainlandChinaattheendofthesecondquarter. “They are very aggressive in store expansion and, in China, it isverycommontobuyadrinkfromLuckin for $2 or less after heavy discounts,” said Jianggan Li, founder andCEOof techresearchcompanyMomentumWorks. Source: TheStraitsTimesandCNBC.com Extract 4: Asustainablefoodsystemfor Singaporeandbeyond Singaporeisvulnerabletosupplyshocksanddisruptionsasweimportmorethan90percentofour food. For greater foodsecurityandaffordability, wehaveset a“30by30” goal –tobeableto produce 30 per cent of our nutritional needs by 2030. And the challengeistoachievethiswithlessthan1per cent of landset asidefor farmingtoensureSingaporecanhaveareliableaccesstosufficientsupplyofaffordableandnutritiousfood. This requires us to grow more with less in a highly productive, climate-resilient, andresource-efficient way. Long-term strategic planning is critical in achieving our goal in foodsecurityandthiswill beachievedfrombothproductionandconsumptionaspect. InSingapore,we are re-developing the LimChu Kangarea, wheremanyof our farmsarecurrentlylocated.Our visionistotransformit intoavibrant,high-techagri-foodclustertoboostthedomesticfoodproduction. Technologyandinnovationarekeyenablersaswejourneytowardsourgoal.Wearenowatthecusp of the fourth agricultural revolution. With climate change posing challenges to theproduction of food, the industry needs to adopt technology to overcome the challenges andproduce more, in a sustainable manner. By using Internet of Things automation systemsandrainwater collection for irrigation and fertigation, it can potentially produce 33 tonnesof fresh,produceannually,withina750sqmetrescompactfacility. On the consumption front, we conducted engagement sessions last year with variousstakeholdersrangingfromfarmers, educators, andnaturegroups.Apubliceducationcampaignon reducing food waste through buying what we need and not hoarding werethemainideas ©CatholicJuniorCollege 9570/01JC2PRELIMINARYEXAMINATION/2024

5 proposed – effectively addressing the excessive demand by changing mindsets towardsresponsiblefoodpurchase. Source:AdaptedfromReuters,25Sep2021 Questions (a) UsingFigures1and2, explainhowthepriceof fertilisershasaffectedthepriceofwheat, and why this effect was predicted to be lagged.[3] (b) Using a diagram, explain howthe imposed sanctions on Russia could negativelyaffecttheUSeconomy. [3] (c) With reference to Extract 2, explain one factor a government can consider whendeciding if it should intervene in the market for fertilisers.[2] (d) UsingExtract3, (i) explain two reasons why Luckin Coffee chose to expand its branches beyondChina. [4](ii) discuss whether the introduction of mobile app is likely to benefit Luckin Coffee.[8] (e) Discuss whether the use of technology or public education is the more effectiveway to achieve food security and affordability in Singapore.[10] [Total:30] ©CatholicJuniorCollege 9570/01JC2PRELIMINARYEXAMINATION/2024

6 Question2: Sri Lanka’sfinancial crisis Figure3: Nominal wagegrowthandinflationrate, Sri Lanka Source: Central Bankof Sri Lanka, 2022 Figure4: Sri Lankanrupeesper oneUSdollar Source: Timesof India, May2022 Extract 5: Reasonsfor Sri Lanka’sFinancial Crisis Yearsof economicmismanagement andweakgovernancecoupledwiththeimpactsofexternalshocks, such as the COVID-19 pandemic and the Russian invasion of Ukraine, plunged SriLanka into its worst-ever crisis in 2022. Sri Lanka faced unsustainable debt and a severebalance of payments crisis in 2022. The country’s Gross Domestic Product contractedbyanestimated8.7percent in2022andisexpectedtocontract further byroughly3percent in2023before returning to positive growth in 2024, ac