PJC 2012 H1 Prelim Exam (03 Sep 2012)

Candidate Name: __________________________ CT Group: _______ Index number: __________ ECONOMICS 8819/01 Higher 1 Paper 1 12 September 2012 3 hours Additional materials: Writing Paper READ THESE INSTRUCTIONS FIRST Write your class, index number and name 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. Section A Answer all questions. Section B Answer one question. At the end of the examination, fasten your answers for Questions 1, 2 and 3 or 4 separately. The number of marks is given in brackets [ ] at the end of each question or question part. This document consists of 8 printed pages [Turn over PIONEER JUNIOR COLLEGE JC 2 Preliminary Examination 2012

Pioneer Junior College 8819/2012 2 Section A Answer all questions in this section. Question 1 Housing Markets in China and Singapore Extract 1: The effects of falling house prices The problems in housing usually have important implications outside the construction industry. For example, a decline in housing wealth reduces households’ ability and willingness to spend. Lower sales of goods and services also reduce the incentives for firms to invest and hire. These consumer-related effects are on top of the direct consequences of low rates of home construction for job creation and income. In short, housing problems affect not just the homebuilding industry, but also the vitality of the economy as a whole. Source: Adapted from a speech by Chairman Ben S. Bernanke for 2012 National Association of Homebuilders International Builders' Show, Orlando, Florida, 10 Feb 2012 Extract 2: Singapore’s housing market Prices for property in Singapore have reached a record high. Singapore’s low crime rate, good schools and low taxes mean that expatriates and investors are increasingly attracted to the property market. Alvin Tan, director of residential sales for Savills' Singapore’s office said: “A firmer economic recovery, the continued robust GDP growth, and optimism surrounding the two new [casino] integrated resorts could be possible factors that continue to draw buyers into the market, lending support for the current prices.” Officials have promised to release more government land this year for real estate development. Peter Evans, sales director at property consultants Forbes Le Brock, said that Singapore’s high prices had also been driven by its small size, which restricts the amount of development possible. “Investing in Singapore, despite its high prices, is therefore a good opportunity, as there will be a more limited supply of land in the future.” Source: Adapted from