2022 TJC H2 Prelim Paper 1 Question Paper

TEMASEK JUNIOR COLLEGE 2022 JC2 PRELIMINARY EXAMINATIONS Higher 2 ECONOMICS 9757/01Paper 1 24 August 20222 hours 15 minAdditionalMaterials:one12-pageanswerbooklet,onepieceof writingpaperforrough work READ THESE INSTRUCTIONS FIRST Ananswerbookletwill beprovidedwiththisquestionpaper.Youshouldfollowtheinstructionsonthefrontcover of the answer booklet. If you need additional answer paper ask the invigilator for acontinuationbooklet. Answerallquestions. Indicate the question number clearly in your answers. Start Question 1 and Question 2 on a fresh page. The number of marks is given in brackets [ ] at the end of each question or part question.

2 This document consists of7printed pages and1blankpage.

3 Question 1: Government intervention in the market for rare earths Extract 1: The uses of rare earth elements Rareearthelements(REEs)isacollectivetermforseventeenchemical elementsintheperiodictable. Despitethename,REEsarenotveryrareandfoundfarmorecommonlyintheEarththanmost precious metalssuchasgoldandplatinum. However, extracting, processingandrefiningREEs are tricky for a myriad of technical and environmental reasons. Rare earth metals like dysprosiumand terbiumplay a critical roleindefense, technologyandelectric vehicles. Neodymiumandpraseodymiumaresomeof themost sought-after rareearthelements crucial in products such as motors, turbinesandmedical devices. Demandfor themexploded in recent years with the growth of technology and will continue to climb amid theongoing race to create a large electric vehicle market. Source:CNBC,17 April 2021 Figure 1: Price of rare earth dysprosium oxide, 2009 – 2024 (US$ per kilogram) Source:statista.com

4 Extract 2: The harms of rare earth mining Beginning in the 1990s, rare earth mining took off in the region located in Southeast Chinaabout 300 miles north of Hong Kong. As China began to produce more smartphones, windturbines, electric vehicles, andother high-techproductsrequiringREEs, theminingintensified.But the removal of theseelementsfromtheearth’scrust, usingamixof water andchemicals,caused extensive water and soil pollution. “To us as an environmental group, wehopethat theenvironmental damagecanstopandthattheseexternal [pollutioncosts] couldbeinternalizedinthecost” of products, MaJun,aleadingChineseenvironmentalist anddirector of theInstitutefor PublicandEnvironmental Affairs,saidin a phone interview. Ma’s fear is that other regionsaroundtheworldcouldsuffer asimilar fateif theybecome, likeChina, thesupplier of cheaprareearthelements, withlittleor noenvironmental priceattached.“I hope that wedon’t missthisopportunity,” hesaid. “Thereistalkthat similar miningcouldbestarted in Africa and other regions, so we should not repeat the same mistakes.” Deng Zhiyong, director of the Longnan Environmental Protection Department, said in aninterviewthat themininghasdumpedexcessiveamountsofammoniaandnitrogencompoundsinto the region’s ground and surface water. Other pollutants, such as cadmiumand lead, arealso released during the mining process; long-term exposure to these metals poses health risks. Source:Yale School of the Environment,2 July 2019 Extract 3: China’s stranglehold of the rare earths supply chain will last another decade Western economies are set toremainheavilydependent onChinafor therefiningof REEsforthenext decade. For threedecades, theChinesegovernment hashadastrategicvisionfortheREE industry – something the West has lacked – and it now dominates the supply chain. In2021,Chinamadeup54%ofglobal REEminesupply,followedbyNorthAmericaat18%,therest of Asia at 14%, Australia at 12%and Europe at 2%, according to Roskill. However, itsdominanceof neodymium'sglobal minesupplyishigher, at 62%. In2021,Chinaaccountedfor85%of the global supply of refined REEs, followed by therest of Asiaat 13%andEuropeat2%, according to Roskill. In the case of neodymium, it made up 84% its refined supply. Furthermore, China has a more than 90%share of the global production of downstreamrareearth products and technologies, including magnets, according to consultancy Tahuti Global. Source:Mining-technology, 26 Apr 2022

5 Extract 4: Cleaning up mining Thereareseveral thingsthat needtohappenregardingtheenvironmental impact ofrare-earthmining. First, thereshouldbeeffortsinresearchanddevelopmenttowardproductsthatrelylesson rare-earth metals. For example, Honda is developing hybrid cars that are mostly free ofrare-earth metals. Second, there needs to be an emphasis on finding more sustainable options for extraction. Third, diplomatic channels should be used to incentivise a modernising reformof China’s laxregulation of rare earth miningandanimprovement of standardsfor environmental protection.Onlythenwill associatedenvironmental cleanupandpreservationcostsbeaddedtothecostofoperating mines. Lastly, the United Nations could pursue global standards for rare-earth mining. All of these steps will go towardpreventingadditional damagetotheEarth. However, existingdamage must be cleaned up. China is taking steps toward fixing the issues resulting fromdecades of rare earth mining. These remediation efforts involve processes like pumpingcontaminantsoutofgroundwaterandpumpingfreshwaterbackintodilutetoxinconcentrations.The country is also enacting tougher regulations tostemthedamagedonebyexistingminingcompanies. For example, companies must upgrade their equipment tomoremodern, efficienttechnology and must mine for metals using more sustainable practices. Source:earth.org, 14 July 2020 Questions (a) With evidence from Extract 1, (i) What can you conclude about the price elasticity of supply of rare earth elements(REEs)? [2] (ii) Using a demand andsupplydiagram, explainthelikelychangeintheREEsmarket inthe future. [4] (b) WithreferencetoFigure1,summarisethetrendofthepriceofdysprosiumoxideduringtheperiod 2009 – 2024. [2] (c) Explain the meaning of a positive statement and a normative statement and identify anexample of each type from Extract 2. [4] (d) To what extent wouldrareearthminingimprovethestandardof livingof peopleinChina?Discuss. [8] (e) Discuss the viewthat tougher government regulations for mining companies to ‘upgradetheir equipment tomoremodern, efficient technologyinrareearthmining’ (Extract4)isthebest policy to alleviate the negative effects in the extraction of rare earth metals. [10] [Total: 30][Turn Over

6 Question 2: Opportunities and challenges in Southeast Asian economies Table 1: Selected economic indicators of Indonesia from 2016 – 2020 2016 2017 2018 2019 2020Real GDP Growth rate(% change in Real GDP) 5.0 5.1 5.2 5.0 2.5 Consumer Price Inflation(% change in ConsumerPrice Index) 3.5 3.8 3.2 3 1.9 Source: World Bank,2022 Extract 5: Vietnam economy is Asia's shining star during COVID-19 Vietnam has minimised the economic damage from Covid-19 and is the only country inSoutheast Asia on track for growth this year. Itseconomyisexpectedtogrow2.4%thisyear,according to latest figures from the International Monetary Fund. The IMF credited “decisivesteps to contain the health and economic fallout from COVID-19” for the country’s success.Vietnam has had only 1,288 Covid-19 cases and 35 deaths. The IMF is predicting a strongeconomic recovery in 2021, with growth projected to strengthen to 6.5%“as normalisation ofdomestic and foreign economic activity continues.” The country hasseenslower growththisyear anditsonce-thrivingtourismsector hastakenaparticularlybadhit, but it hasavoidedtheworsteconomiceffectsofthepandemic.Anumberoffactorshavecushionedtheblow, accordingtoMichael Kokalari,chiefeconomistforVinacapital,aVietnam-focusedinvestment company.Vietnam’sexportstotheUShaveincreasedby23%inthefirst threequarterscomparedtothesameperiodin2019, withelectronicsexportsup26%.TheongoingUS-Chinatradewar hasmadeChinaalessattractiveplacetomanufacture,withanumber of tariffs in place on exports. Many multinationals have started operating in Vietnam,including global technology leaders like Apple and Samsung. Apple now has plans tomanufactureitshigh-endAirpodsstudioea