2013 RI H1 Econs Preliminary Examination

8819/01/Prelim/Yr6/13 © RI 2013 [Turn over RAFFLES INSTITUTION 2013 YEAR 6 PRELIMINARY EXAMINATION Higher 1 ECONOMICS 8819/01 Paper 1 4 September 2013 3 hours Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your name, index number and CT 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. Section A Answer all questions Section B Answer one out of two questions At the end of the examination, - Fasten Case Study 1 & 2 together with this cover sheet - Indicate and fasten Essay question separately. This document consists of 12 printed pages and 2 blank pages. Question No. Marks 1 /30 2 /30 Raffles Institution Nurturing the Thinker, Leader & Pioneer Name : ________________________ Civics Class : ________________________ Economics Tutor : ________________________

8819/01/Prelim/Yr6/13 2 © RI 2013 [Turn over BLANK PAGE

8819/01/Prelim/Yr6/13 3 © RI 2013 [Turn over Section A Answer all questions. Question 1 Education Table 1: Government expenditure per student (% of GDP per capita), Singapore Source: The World Bank Table 2: Government expenditure per student (% of GDP per capita), USA 2008 2009 2010 Tertiary student 21.2 19.61 21.7 Primary student 22.5 22.6 22.9 Source: The World Bank Table 3: Participation in Publicly Funded University Education, Singapore 2005 2006 2007 2008 % of Primary One cohort who were admitted to universities 23.7 23.8 23.8 24.8 Source: Ministry of Education, 2004 Figure 1: Monthly Wage Profiles of Workers by Educational Attainment, Singapore 2008 2009 2010 Tertiary student 28.9 29.8 30.8 Primary student 9.6 11.5 12.3 Monthly wages (S$ thousand) Years of work experience Tertiary Primary 7 6 5 4 3 2 1 0-10 11-20 21-30 31-40 41-50 Source: Monetary Authority of Singapore, 2004

8819/01/Prelim/Yr6/13 4 © RI 2013 [Turn over Table 4: Selected Economic Data, Singapore and USA 2012 Economic data Singapore USA Unemployment rate 1.9% 8.1% Adult literacy rate* 92.5% 99% Gini coefficient** 0.414 0.378 GDP per capita (at 2012 PPP$) $61,803 $49,965 * % of total population aged 15 and above able to read and write. ** ‘1’ represents complete inequality in income distribution while ‘0’ represents perfect equality. Source: Various Extract 1: Higher Education in Singapore In providing university education, Singapore’s policy has always been to establish a more equitable and sustainable cost sharing formula between the state and the students. This would better reflect the balance between private and external benefits generated by university education. Currently, the government funds about 75% of the total cost of undergraduate education. Other than providing education subsidies, the government also plays a role in the distribution of places in tertiary education based on projected economic needs. In an ideal situation, university students would select their courses of study based on interest and possibly earn ings potential of their degrees. Universities would respond by supplying places in areas of demand. However, solely relying on student choices to determine university offerings may result in the needs of the economy being overlooked. For example, in developed countries like Japan, Europe and USA, students are losing interest in science, mathematics and engineering and putting more emphasis on self-actualization and humanistic concerns. This results in a glut in the administration and humanities fields while at the same time, employers are looking for mathematics and science graduates. The above has prompted the Singapore government to do some form of manpower planning instead of leaving the distribution of places in the state-funded universities to individual preferences. Source: Economics in Public Policies: The Singapore Story, 2012 Extract 2: Master reading, Maths early for a good start in life Researchers Stuart Ritchie and Timothy Bates from the University of Edinburgh in Scotland found that a child's mathematics and reading scores at age seven are key indicators of socio-economic status in adulthood. They established this connection using data that tracked the progress of more than 17,000 people born in the UK. What the researchers found was a strong correlation between reading and Maths scores at age seven and socio -economic status 35 years later. Reading made such a difference that going up just one reading level at age seven was associated with a £5,000 (S$9,600) increase in income at age 42.The researchers concluded that basic childhood skills – literacy and numeracy – proved important throughout life, independent of how smart you are, how long you stay in school, or the social class you started off in. What can Singapo re educationists and policymakers take away from the findings of this Edinburgh University study? Source: The Straits Times, 7 July 2013

8819/01/Prelim/Yr6/13 5 © RI 2013 [Turn over Extract 3: College Graduates Unemployment: Are Government Policies Helping? The Obama administration has been promising increased economic growth and jobs for college graduates, but is it delivering on that promise? The statistics would say no, says Diana Furchtgott-Roth, a senior fellow with the Manhattan Institute. In a commencement address at Morehouse College recently, President Obama told graduates, "Your generation is uniquely poised for success." Although President Obama's message is heart-warming, it is the opposite of true.  Young adults have hardly benefited from declines in the unemployment rate.  Between April 2012 and April 2013 the overall unemployment rate has declined from 8.1 percent to 7.5 percent.  The unemployment rate in 2012 for newly gr aduated men and women with bachelor's degrees was 8 percent, far higher than the 5 percent rate such young adults experienced in 2006. Young Americans who campaigned for Obama, voted for Obama, and turned out their friends for Obama are graduating from col lege. They might be poised for success, but most have not yet seen it. Source: Diana Furchtgott-Roth, The National Center for Policy Analysis, May 2013 Extract 4: Is the problem one of subsidy? The provision of higher education is one of the most expensive functions of state governments in the United States, with a tertiary enrolment rate of close to 80%. Historically, states have attempted to provide their residents with access to high -quality tertiary education by providing large subsidies directly to public institutions with few directives for how the money was used. Public institutions, as opposed to private ones, in turn, charged all students a price well below cost, with very little price v ariation between in- state undergraduate students within institutions. However, escalating tuition and tight state budgets have placed higher education institutions under scrutiny recently, as lawmakers debate what type of education government should be promoting and who should pay for it. In the face of declining state support, many universities have introduced differential pricing by undergraduate program as an alternative to across -the-board tuition increases. This practice aligns price more closely with instructional costs. Price does appear to be a policy lever through which state governments can alter the field composition of the workforce they are training with the public higher education system. The efficacy of many of the reform efforts depends on t he r