H2 Prelims Paper 1 Q2_Suggested Answers

©ACJC2022 Preliminary Exam 9757/01 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 can increase national output. [4] • Singapore adopted a zero percent appreciation, allowing the Singapore dollar to depreciate. [1] • The depreciation of Singapore dollar would make exports cheape r in terms of foreign currency. [1] • This increases exports competitiveness, leading to an increase in export revenue and aggregate demand. [1] • As aggregate demand increases, firms respond by increasing production, resulting in an increase in GDP. [1] Note: impact on imports not needed for this question. Use of elasticity concepts also not required. (ii) Explain one possible unintended consequence of “further monetary easing”. [2] • Further monetary easing involves further depreciation of the Singapore dollar, which would increase the price of imports in terms of Singapore dollars. [1] • As the price of imports increases, imported raw materials become more expensive. 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 of imposing rice export restrictions on a domestic rice producer’s revenue. [4] • Rice export restrictions prevent rice producers from exporting to other countries, and thus increase the domestic supply of rice [1] • Increase in supply of rice → surplus of rice at the current prices → downward pressure on price [1] • The demand is price inelastic (PED < 1) since food is a necessity in most rice producing countries [1] • The decrease in price due to the rising supply leads to a less than proportionate increase in quantity demanded. • The loss in revenue due to decrease in price outweighs the gain in revenue due to increase in quantity sold, thus there is an overall decrease in revenue for rice producers. [1] Note: for answers that explain a fall in demand due to a smaller market, maximum of 2 marks since PED concept is not used.

2 ©ACJC2022 Preliminary Exam 9757/01 (ii) Discuss the impact on the economy in countries such as Vietnam and Cambodia of imposing export restrictions. [8] Introduction: • The export restrictions are imposed with the main objective of lowering the prices of commodities 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 explained in (ci), export restrictions increase the supply of important commodities and food in a domestic economy. This helps to r educe prices of food