H2 Prelims Paper 1 Q2_Suggested Answers.docx

Question 2: The Impact of a Global Pandemic on Globalisation Suggested Mark Scheme: (a) Describe the trend in global trade as a percentage of GDP from 2011 to 2020.[2]General trend: Global trade as a percentage of GDP is decreasing from 2011 to 2020. [1]Refinement: However it increased from 2016 to 2018. [1] (b) With reference to Extract 4, (i) Using AD/AS analysis, explain how Singapore’s monetary policy canincrease national output. [4]● Singapore adopted a zero percent appreciation, allowing the Singapore dollar todepreciate. [1]● Thedepreciationof Singaporedollar wouldmakeexportscheaperintermsofforeigncurrency. [1]● Thisincreasesexportscompetitiveness, leadingtoanincreaseinexportrevenueandaggregate demand. [1]● Asaggregatedemandincreases, firmsrespondbyincreasingproduction,resultinginan increase in GDP. [1] Note: impact on imports not neededfor thisquestion. Useof elasticityconceptsalsonotrequired. (ii) Explain one possible unintended consequence of “further monetaryeasing”. [2]● Further monetary easing involves further depreciationof theSingaporedollar, whichwould increase the price of imports in terms of Singapore dollars. [1]● As the price of imports increases, imported rawmaterials become moreexpensive.This leads to an increase in cost of production and imported inflation. [1] (c) (i) Using the concept of price elasticity of demand, explain the impact ofimposing rice export restrictions on a domestic rice producer’s revenue.[4]● Riceexport restrictionsprevent riceproducersfromexportingtoother countries, andthus increase the domestic supply of rice [1]● Increaseinsupplyof ricesurplusofriceatthecurrentpricesdownwardpressureon price [1]● The demand is price inelastic (PED < 1) since food is a necessity in most riceproducing countries [1]● The decrease in price due to the rising supply leads to a less than proportionateincrease in quantity demanded.● The loss in revenue due to decrease in price outweighs thegaininrevenueduetoincrease in quantity sold, thus there is an overall decrease in revenue for riceproducers. [1] Note: for answers that explain a fall in demand due to a smaller market, maximumof 2marks since PED concept is not used. (ii) Discuss the impact on the economy in countries such as VietnamandCambodia of imposing export restrictions. [8] ©ACJC2022 Preliminary Exam 9757/01

2 Introduction:● The export restrictions are imposedwiththemainobjectiveof loweringthepricesofcommodities and food for the domestic economy.● Such restrictions can have both positive and negative effects on an economy. Requirement 1: Positive impact of export restrictions● As explainedin(ci), export restrictionsincreasethesupplyof important commoditiesand food in a domestic economy. This helpstoreducepricesof foodandother rawmaterials.● Thusfoodandcommoditieswill bemoreaffordabletodomestichouseholds.Withanincrease in purchasing power, material standard of living improves.● In addition, with cheaper rawmaterials, cost of production for firms is reduced. Asfirms a