RI Y5 H2 Promotion Examination - Examiner's Report 2018

ECONOMICS Higher 2 Syllabus 9757 Examiner’s Report Year 5 Promotion Examination 2018 R a f f l e sI n s t i t u t i o n N u r t u r i n g t h e T h i n k e r , L e a d e r & P i o n e e r TEL: 65 6419 9888 ● FAX: 65 6419 9898 http://www.ri.edu.sg ● One Raffles Institution Lane, SINGAPORE 575954

Y5/9757/Promos/18 2 © RI 2018 [Turn Over ECONOMICS Y5 H2 Promotion Examination 2018 Paper 9757/01 Paper 1 Case Study (a)(i) Define Consumer Price Index. [1] Suggested Answer: The Consumer Price Index (CPI) measures the weighted price of a fixed basket of goods and services commonly purchased by a typical household relative to a base year. Mark Scheme - For accurate definition of CPI – 1m Examiners’ Comments ­ Relatively straight forward q uestion on the definition of CPI but most students did not know the precise definition. ­ Some incorrectly expressed definition in their own words and used: ‘total value placed on’, ‘measure of the basket of g/s’, ‘expenditure’, ‘fixed quantity of g/s’ instead of the price of a fixed basket of goods and services ­ Some incorrectly stated that CPI measure s the change in price of the basket of g/s  that is known as the inflation rate (a)(ii) With reference to Figure 1, explain the relationship between rental prices in the UK and the consumer price index between 2006 and 2014. [2] Suggested Answer:  There is a positive relationship between rental prices in the UK and CPI  From Figure 1, a rise in rental prices correlated to a positive inflation rate  an increase in CPI  As rent forms a component of the basket of goods considered in the CPI  Rental Prices and CPI are positively related Mark Scheme - State relationship (Positive/Direct) with supporting evidence from Figure 1 – 1m - Link rental to basket of goods and service in CPI – 1m Examiners’ Comments - Poorly attempted question: many incorrectly interpreted the data and stated that both CPI and rental prices fell when they increased. Take note that the data shows rate of change – when rate of change is positive, both values are increasing. - Many students did not explicitly state the relationship between the 2 variables and merely described the trend. Students are reminded that there is a need to clearly answer the question: direct/positive relationship

Y5/9757/Promos/18 3 © RI 2018 [Turn Over - Some were confu sed between cause and effect. i. e. an increase in CPI leads to an increase in rental prices. That is incorrect. (b) Explain 1 possible reason for each of the following: (i) why rental prices are rising. [2] Suggested Answer:  “The global financial crisis brought about tightened credit conditions, particularly affecting deposits, forcing people to rent for longer.” (Extract 1)  decrease availability of credit for purchasing houses. As rental service