RI Y5 H2 Promotion Examination - Paper 1 2018

9757/01/Promo/Y5/18 © RI 2018 [Turn over RAFFLES INSTITUTION 2018 YEAR 5 PROMOTION EXAMINATION Higher 2 ECONOMICS 9757/01 Paper 1 Case Study 25 September 2018 1 hour 10 minutes Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your name, index number and civics class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for diagrams, graphs or rough working. Do not use paper clips, highlighters, glue or correction fluid. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. Name: ______________________ Civics Class: ________________ Question Marks Economics Tutor: ____________ 1 /30 This document consists of 5 printed pages and 1 blank page.

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3 9757/01/Promo/Y5/18 © RI 2018 [Turn over Question 1: Figure 1: Rental Price Indices & Inflation in the UK Source: Office for National Statistics, UK Extract 1: The Rise of Generation Rent in the UK As house prices have risen and social housing supply remains constrained, the number of households in the private rented sector has more than doubled since 2001, rising from 2.3 million to 5.4 million. The trend is particularly strong in the 20-39 age group where more than half will be renting privately by 2025. The global financial crisis brought about tightened credit conditions, particularly affecting deposits, forcing people to rent for longer. The private rented sector acted as a default option for the increasing number of people who could not afford to buy nor qualify for social housing. For some people, renting may be a desirable choice for its flexibility, but for others it may be due to the absence of alternative accommodation. The rising popularity of homesharing websites such as Airbnb is adding to the problem. The trendy replacement for hotels and hostels in effect removes housing units from the overall supply – units that might otherwise be available for rent. In the long run, if policymake rs wish to reverse these trends, a large and sustained increase in affordable housing supply would be required. This could involve action to address skill shortages in the housebuilding sector and enhanced financial incentives to build more homes. Source: www.pwc.co.uk Extract 2: Rent Controls in London Britain’s housing crisis was laid bare in a report that showed how soaring rents, particularly in London, can swallow salaries. The average private renter in the U.K. capital spent 40 percent of their income on housing between 2013 and 2015, compared with 28 percent in the rest of Britain, according to the Institute for Fiscal Studies. This has motivated calls by CPI London UK Annual change in index level Consumer Price Index (CPI) UK London

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