ACJC H1 ECONS P1 QP

1 ©ACJC2017 Preliminary Exam 8819/01 [Turn over ANGLO-CHINESE JUNIOR COLLEGE 2017 JC2 PRELIMINARY EXAMINATIONS ECONOMICS 8819/01 Higher 1 Paper 1 14 August 2017 3 hours Additional materials: Writing Paper READ THESE INSTRUCTIONS FIRST Write your 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 / tape. Section A Answer both questions. Begin each case study question on a fresh sheet of paper. Section B Answer one question. Begin the essay question on a fresh sheet of paper. At the end of the examination, fasten your answers for each question separately to the cover sheets provided. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages. Please check that your question paper is complete.

2 ©ACJC2017 Preliminary Exam 8819/01 Section A Answer all questions in this section. Question 1 The Market for Higher Education Table 1: Singapore government’s expenditure per student (Singapore Dollars) 2012 2013 2014 2015 Primary 7396 8549 9123 10,160 University 20,777 21,870 22,181 22,058 Source: Education Statistics Digest 2016, Ministry of Education Extract 1: Singapore government’s spending on higher education There are compelling reasons to heavily subsidise higher education. Firstly, there are p rivate returns such as higher employability and wage s as well as positive social returns to higher education, in terms of lowering poverty and crime rates. Societies that have better educated populations tend to have lower crime rates, enjoy greater social cohesion and a well-educated labour force that is needed for long-term economic development. Secondly, there is a case for the g overnment to intervene to ensure that there are equal opportunities. While it is generally feasible for individuals to fund their own tertiary education through loan schemes, the lower-income group may face credit constraints. Others may have heavy financial responsibilities that compel them to enter the labour market as soon as possible, rather than contemplate further education. Evidence also suggests that the lower - income group tend to underestimate the returns to education, due to lack of information and poor community role models. To encourage this group to take up higher education, the government provides financial assistance for higher education. There are also student and tuition fee loan schemes provided for the middle-income group at low interest rates. The Singapore government has always invested heavily in education and will continue to do so in future, with greater emphasis on developing higher education. This requires a careful balancing between strategic considerations, equity, and efficiency. Source: Singapore Budget, 2010 Extract 2: Reduction in subsidies for university education in the UK A generation ago, students paid nothing for university education. In 2006, the fee cap for university education was £3,000. In 2012, the fee cap was raised further to £9,000. However, the vice-chancellor of Oxford University had recently expressed that the fee cap of £9,000 is insufficient to reflect the true cost of an Oxford degree at £16,000. Even with the raised fee cap, Oxford still faced an annual funding gap of £70 million. Moreover, Sir Christopher Snowden, president of Universities UK, says a £9,000 fee cap is still "not sustainable" for universities.

3 ©ACJC2017 Preliminary Exam 8819/01 [Turn over Universities UK will publish a report on the future of university financing. It will examine how universities will respond to rising birth rates, which means that the number of university places required will grow from 368,000 to 460,000. The cut in the level of government subsi dies for universities will lead to students paying higher tuition fees but also eases the large government debt. However, the government said these changes would put the higher education sector on a more sustainable footing. They believe the £9,000 fee allows universities to deliver high-quality teaching, with many institutions now planning to invest more in improved teaching facilities for students. Adapted from BBC, 1 Nov 2013 Extract 3: Higher education benefits the UK economy The higher education sector has significantly benefited the UK economy in many ways. Firstly, international students studying in London bring in far more money than they use in public services. Students coming to study in UK universities from out side the EU pay an average of £12,000 a year for an undergraduate degree. A 2015 report from London First, an organisation representing London businesses, showed that international students in the capital used £540 million of public services such as the NH S (National Health Services), but brought in over £2.8 billion to the economy through tuition fees, spending and hosting family and friends coming to visit – a net contribution of £2.3 billion. Secondly, four in ten young adults have a degree – and they can earn £9,000 more than those without a degree. The government’s latest statistics show the employment rate for working - age graduates, aged 25-34, is 87.5% – the highest level since the end of 2007. Thirdly, research collaborations between UK universiti es and business are worth more than £3.5 billion. There are currently 12,240 collaborative research projects between universities and businesses, including 368 in the arts and humanities, and 6,260 in engineering. The UK ranks fourth in the world for university-industry collaboration in research and development. Source: The Guardian, 9 July 2015 Extract 4: Huge increase in number of graduates 'bad for UK economy' The huge increase in number of graduates is bad for students and employers, suggests Chartered Institute of Personnel and Development (CIPD). The government is being urged to end the political drive to get more people into university after research showed that the huge increase in the supply of graduates over the last 35 years has resulte d in more occupations and professions being dominated by graduates . These include the banking, education, police and estate agency sectors in which jobs were mainly occupied by non-graduates in the past. The CIPD said the notion of a tertiary education p remium is being called into question by graduates’ average debt of £44,000 and estimates that 45% of student loans would never be paid off. Noting that its research had shown more than half of the graduates take non-graduate jobs, the CIPD said the current system was not just bad for many of those who had been to university but also for non -graduates who were overlooked for jobs that did not require a degree.

4 ©ACJC2017 Preliminary Exam 8819/01 Governments have been encouraging more and more students to pursue graduate qualifications. However, the research showed that for many graduates, the costs of university education outweigh its personal economic benefits. This is also undesirable for employers and the economy as mismatches, where graduates take up non-graduates’ jobs , can be associated with lower levels of employee engagement and loyalty. Firms may then incur greater hiring and training cost s. Lower levels of engagement will also undermine the government’s attempts to boost productivity. There is the need for a much stronger focus on creating more high-quality alternative pathways into the workplace, such as higher level apprenticeships. CIPD called on ministers to improve the quality of careers advice to ensure young people are better informed about their future careers; a shift in emphasis on apprenticeships