2013 DHS H1 EC QP

1 © DHS 2013 Name: Index Number: Class: DUNMAN HIGH SCHOOL Preliminary Examination Year 6 Economics 8819/1 Higher 1 Section A Case Study Section B Essay 25 September 2013 3 hours Additional Materials: Writing Papers PLEASE READ THE FOLLOWING INSTRUCTIONS FIRST Write your name and 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 any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Please start on a fresh sheet of paper for a new question. Section A Answer all questions. Section B Answer one question. At the end of the examination, fasten all your work securely into three separate bundles, one for each question. The number of marks is given in brackets [ ] at the end of each question or part question. Circle the question number you have attempted in Section B. Section A Section B Q1 Q2 Q3 Q4 This document consists of 8 printed pages including this cover page. [Turn over

2 © DHS 2013 Section A Answer all questions in this section. Question 1 Disasters across Southeast Asia Extract 1: Thai Prime Minister to Take Command of Flood Control Efforts The Prime Minister said that she would take direct command of flood control in Thailand as criticism of the government mounted after da ys of conflicting messages. The continued confusion added to analysts’ fears that Thailand’s performance and a lack of adequate infrastructure to handle flooding would lead to a long-term loss of foreign investment. With more than 300 lives claimed and about 14,000 companies employing more than 600,000 workers forced to shut down, Thailand’s floods have brought steep costs not only to the country’s own economy but also to foreign investors and export markets, principally Japan. Being the leading exporter of computer disk drives, the floods were expected to cause a temporary worldwide shortage. Its automotive industry, the biggest in the region, is also one of the hardest hit industries. Although most factories are expected to reopen, analysts said the harshest long-term toll of the floods would be to Thailand’s reputation as a stable and reliable home for foreign investors. In a survey compiled before the floods, the World Bank ranked Thailand, despite last year’s political turmoil, as the world’s 17th most attractive country to do business. To salvage its reputation, the government will have to spend heavily on a system of canals and set up an efficient flood control system, a good that cannot be confined to those who have paid for it. Adapted from New York Times, 21 October 2011 Table 1: Statistics for Thailand 2008 – 2012 2008 2009 2010 2011 2012 GDP (constant 2005 US$, billions) 199.5 194.9 210.1 210.3 223.8 Components of GDP (% of GDP) % Private consumption expenditure 56.0 54.8 53.7 55.6 52.7 Government consumption expenditure 12.3 13.4 13.0 13.3 13.2 Gross fixed capital formation 27.4 24.1 24.7 26.3 28.0 Exports of goods and services 76.4 68.4 71.3 76.9 78.0 Imports of goods and services 73.9 57.8 63.9 72.4 75.3 Net inflows of foreign direct investment (% of GDP) 3.1 1.8 2.9 2.3 2.4 Source: World Bank, 2012 Extract 2: Food Price Inflation – Slaying the Hydra Catastrophic flooding and crop losses in Thailand, the world's leading rice exporter, are raising concerns that another food crisis may loom. There are worrying signs that food price fluctuations are now taking place within a much higher bandwidth than before. When food prices rise, it will reduce families' ex penditure on other goods and services such as

3 © DHS 2013 healthcare and education, especially for Asia's poor, who already spend 60 percent of their household budget on food. Much of the sharp increase in the region's food prices is due to production shortfalls caused by extreme weather events – such as droughts and floods across Southeast Asia like Thailand, Cambodia, Laos, Philippines and Vietnam – and subsequent export bans by some food-producing countries. Growing appetites for grains, oil, seeds, sugar and livestock in emerging economies such as China and India are exerting further upward pressure on supply. And then there is high oil prices, which raise costs at almost every step of the food supply chain, from fertiliser and animal feed, to fuel for bringing food from the farm to the kitchen table. With persistently high and volatile food prices here to stay, what are policymakers to do? There are some levers policymakers can pull, including a broad range of supply-side policies to reduce bottlenecks in commodity-based industries, reduction of trade barriers between countries – to counter local food shortages through imports from surplus producers, and increasing productivity. Adapted from The Straits Times, 29 October 2011 Extract 3: Singapore Vulnerable to Global Price Rises Singapore imports more than 90 percent of its food and is, therefore, vulnerable to global price increases. Hence it has always adopted a strategy of source diversification – that is, to import from various food sources. This helps to ensure a resilient supply of food, and, to a certain extent, minimise volatility in food import prices caused by short-term supply shortages. Last year, Singapore imported 310,135 tonnes of rice. Some 53 percent came from Thailand, 26.2 percent from Vietnam and 13. 8 percent from India. The rest came from countries such as Myanmar, the United States and China. Since April last year, the Monetary Authority of Singapore has allowed the Singapore dollar (SGD) to appreciate against the currencies of our major trading partners, which has helped to dampen the rise in prices of our food imports. However, DBS economist cautioned that the strong SGD could have played a significant par t in July's poor figures, where electronics exports dived 16.9 per cent in July from the same month last year. Adapted from The Straits Times, 15 and 18 August 2011 Extract 4: The Slow and Steady Way to Grow Amidst the slow projected economic growth between 1 per cent and 3 per cent next year largely due to problems in Europe and the United States, inflation in Singapore will continue to be high. The high inflation is fuelled by persistently high prices of commodities, higher prices of cars and housing as well as higher wage demands due to tight labour markets. Said DBS economist, "Every economy and country has physical limits, especially for a small economy like Singapore . There is only so much that technological innovation and the Internet can do to push Singapore's production frontiers." Adapted from The Straits Times, 16 December 2011

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