AJC H1 ECONS P1

1 ECONOMICS 8823/01 Paper 1 2 9 A u g u s t 2 0 1 8 3 hours READ THESE INSTRUCTIONS FIRST Write your name, PDG and index number in the spaces provided on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use an HB pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. Begin your answer to each question on a fresh sheet of writing paper. At the end of the examination, fasten your answers to each question separately. Fasten this cover page in front of your answers to Question 1. The number of marks is given in brackets [ ] at the end of each question or part question. Question Number Marks Awarded Name: ________________________________ ( ) 1 /45 PDG: ___________ 2 /45 Total Marks This document consists of 8 printed pages and 1 blank page. [Turn over] ANDERSON JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATION 2018 Higher 1

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3 Answer all questions. Question 1: Aging population: Burden or opportunity? Figure 1: Health Spending in Japan Source: OECD Extract 1: Japan’s demographic time bomb is getting more dire, and it’s a bad omen for the country An aging population like Japan’s poses numerous problems. The government will have to spend more on healthcare, and that, coupled with a shrinking workforce and tax base, is a recipe for economic stagnation. It also means, among other things, that there will not be enough young people to care for the elderly. “An aging population will mean higher costs for the government, a shortage of pension and social-security-type funds, a shortage of people to care for the very aged, slow economic growth, and a shortage of young workers,” Mary Brinton, a Harvard sociologist, told Business Insider last year. Source: Business Insider, 6 June 2018 Extract 2: Nursing care workers hard to find but in demand in aging Japan As the nation’s population rapidly greys, ensuring there are enough nursing care workers to meet growing demand has become a pressing iss ue. There has actually been a rise in nursing care workers. However, this has failed to keep pace with the rapidly growing demand, resulting in a nursing care industry with a chronic shortage of manpower. Considering Japan’s declining workforce, the labour shortage in the industry is expected to worsen over time. The government seeks to add 250,000 more nursing care workers to the system from 2017 by improving their working conditions and increasin g their average monthly pay by 10,000 yen. But the state has not made clear how it will finance this. 0 2 4 6 8 10 12 Health Spending in Japan (Total, % of GDP)

4 The government also plans to create new nursing care facilities to accommodate 500,000 more users by the beginning of 2020. This, however, has been questioned by industry experts who argue that in densely populated urban areas, the lack of workers is more acute than the shortage of facilities. The increasing difficulty in finding enough workers has led more facilities to rely on temporary staff dispatched from agencies, and some have reduced services. To lessen the burden on staff, some nursing care facilities are starting to use robotics, including wearable units for elderly people and care workers. Source: Japan Times, 27 June 2016 Extract 3: Japan's shrinking population not burden but incentive Prime Minister Shinzo Abe said Japan’s aging, shrinking population was not a burden, but an incentive to boost productivity through innovat ions. Abe’s comments on Wednesday came days after official data showed that Japan has 34.6 million people aged 65 and older, or 27.3% of the population - the highest proportion among advanced nations. “I have absolutely no worries about Japan’s dem ography,” Abe said at a Reuters Newsmaker event, noting that nominal gross domestic product had grown despite losing 3 million working- age people over the last three years. “Japan may be aging. Japan may be losing its population. But these are incentives for us,” he said. “Why? Because we will continue to be motivated to grow our productivity,” Abe added, citing robots, wireless sensors, and artificial intelligence as among the tools to do so. “So, Japan’s demography, paradoxically, is not an onus, but a bonus.” Abe has focused on mobilising women and the elderly to compensate for a shrinking workforce rather than tackle head-on the politically touchy topic of immigration, although some changes are being considered on that front. Source: Reuters, 21 September 2016 Extract 4: Aging Japan: Robots may have role in future of elder care Robots have the run of Tokyo’s Shin-tomi nursing home, which uses 20 different models to care for its residents. The Japanese government hopes it will be a model for harnessing the country’s robotics expertise to help cope with a swelling elderly population and dwindling workforce. Allowing robots to help care for the elderly - a job typically seen as requiring a human touch - may be a jarring idea in the West. But many Japanese see them positively, largely because they are depicted in popular media as friendly and helpful. Plenty of obstacles may still hinder a rapid proliferation of elder care robots: high costs, safety issues and doubts about how useful and user-friendly they will be. The Japanese government has been funding development of elder care robots to help fill a projected shortfall of 380,000 specialised workers by 2025. Authorities and companies in Japan are also eyeing a larger prize: a potentially lu crative export industry supplying robots to places such as Germany, China and Italy, which face similar demographic challenges now or in the near future. A few products are trickling out as exports: Panasonic Corp has started shipping its robotic bed, which transforms into a wheelchair, to Taiwan. Source: Reuters, 28 March 2018

5 Extract 5: A home from home for Japan's elderly There are some key ways in which the nursing care sector in Japan has evolved to preserve its quality of care even as the hyper-ageing society ramps up its eldercare facilities. A quarter of its people are 65 or older now. By 2040, this group will make up more than a third of its population. Growing in tandem is the number and types of long-term senior care facilities available in Japan. The most common is the tokuyo, a publicly funded facility that provides nursing care to seniors who have serious physical or mental disabilities. There were 566,600 beds in these facilities last year, up from around 300,000 in 2000. Family members have traditionally cared for th e elderly but nursing homes became affordable with the introduction of Japan’s long-term care insurance (LTCI). Such a system is designed to shift the responsibility of supporting the elderly aw ay from the family and into the public domain. This is key as more of the elderly requiring long-term care, and for longer periods. Yet, there was a lack of adequate caregiver support. The principles of this system include: supporting the independence of the elderly rather than just providing care, and allowing users to benefit from a range of services from institutions of their choice. This has led to a competitive market of service providers, mostly private players, springing up in the last decade. Source: Straits Times, 31 July 2016 Questions (a) (i) Describe the trend for health spending in Japan from 2000 – 2017. [1] (ii) Discuss how far the concept of price elasticity of demand may account for the above trend in health spending. [9] (b) With reference to data, discuss the likely effects of a shrinking workforce in Japan and technological advancement on the robotics market. [8] (c) Explain two possib