2013_CJC_H2_Econs_P2 Prelim Question Paper with Answers

CATHOLIC JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATIONS In preparation for General Certificate of Education Advanced Level Higher 2 ECONOMICS 9732/02 Paper 2 3 Sep 2013 0800 - 1015 Additional Materials : Writing Paper 2 hours 15 min READ THESE INSTRUCTIONS FIRST Write your name, class and question number 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. Begin each question on a new sheet of paper. Answer three questions in total, of which one must be from Section A, one from Section B and one from either Section A or Section B. At the end of the examination, hand in ALL questions separately. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 2 printed pages

2 © Catholic Junior College 9732/02/Preliminary Exams /2013 Answer THREE questions in total. Section A One or Two of your three chosen questions must be from this section. 1 “The root cause of market failure is far more often lack of information than externalities, and this is where government should direct their efforts to improve the efficient working of the economy.” (a) Explain the two types of market failure described in the preamble. [10] (b) Discuss if legislation is the best way for government intervention in the above situations of market failure. [15] 2 There were 101,000 millionaires in Singapore by the end of 2012, a jump of 10.3 per cent over 2011 and their total income is estimated to have hit US$489 billion, up 11.5 per cent on the 2011 level. Measures are announced to reduce the inflow of foreign workers, and help our businesses adapt to the permanent reality of a tight labour market. Source: Adapted from Straits Times, 2012 Using economic analysis, discuss the likely impacts of abovementioned changes on various product markets in Singapore. [25] 3 (a) Explain how the size of firms affects the price and output decisions of various firms. [10] (b) Discuss the extent to which large firms in an industry impede economic efficiency. [15] Section B One or Two of your three chosen questions must be from this section. 4 (a) Explain the extent to which an increase in net exports will lead to a larger increase in real GDP. [10] (b) The pursuit of higher levels of real GDP per capita leads to higher standard of living. Discuss. [15] 5 The plan is for the Bank of Japan to print more money and to splurge on public works projects to reboot Japan’s recessionary economy. (a) Explain how the above approaches will help to reboot the Japanese economy. [10] (b) To what extent can Singapore adopt the above approaches to solve a recession. [15] 6 There is substantial evidenc