HCI H2 ECONS P2

© Hwa Chong Institution 2015 9732 /02/S/JC2 Prelim 2015 HWA CHONG INSTITUTION JC2 Preliminary Examinations Higher 2 CANDIDATE NAME CT GROUP 14 CENTRE NUMBER INDEX NUMBER ECONOMICS Paper 2 ESSAY Additional Materials: Answer Paper 9732/02 15 September 2015 2 hours 15 minutes READ THESE INSTRUCTIONS FIRST Write your name, CT group, Centre and Index numbers clearly in the spaces at the top of this page and on every page 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 and tape. 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. Begin each question on a fresh sheet of writing paper. At the end of the examination, fasten the ans wer sheets to each essay question separately together with the 3 cover pages provided. If you only attempt 2 essays, please submit a nil return with the 3 rd cover page, indicating the possible essay question you would have attempted. If you only attempt 1 essay, please submit 2 nil returns with the other 2 cover pages, indicati ng the possible essay questions you would have attempted. The number of marks is given in brackets [ ] at the end of each question or part question. You are advised to spend several minutes reading through the questions before you begin writing your answers. You are reminded of the need for good English and clear presentation in your answers. This document consists of 2 printed pages. [Turn over

© Hwa Chong Institution 2015 9732 /02/S/JC2 Prelim 2015 2 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 In 2013, the Pollution Standards Index (PSI) in Singapore hit a record high. It was reported that there was a shortage of face masks used to protect individuals from the harmful effects of the haze. (a) Explain the likely reasons for the shortage of face masks and the role of price mechanism in correcting the shortage. [10] (b) Discuss whether it is justified for the Singapore government to distribute free face masks to households during a haze. [15] 2 The government collects revenue from sale of Certif icates of Entitlement (COEs). There have been large increases in the COE prices for cars in Singapore over the past few years. Discuss the likely effects of higher COE prices on government revenue and expenditure by consumers on different types of cars. [25] 3 In recent years, natural calamities such as floods and earthquakes have caused the cost of raw materials to rise. (a) Distinguish between variable costs and fixed costs and explain whether a rise in these costs will affect a firm’s pricing decision differently. [10] (b) Discuss the extent to which a rise in cost of raw materials will result in an oligopolistic firm changing its price in reality. [15] Section B One or two of your three chosen questions must be from this section. 4 (a) Explain what might cause a current account deficit in the balance of payment. [10] (b) When faced with a deteriorating trade balance, some countries turn to protectionism. However, countries like Singapore do not engage in protectionism. Discuss why governments use different policies to achieve healthy trade balance. [15] 5 (a) Using the concepts of scarcity and opportunity cost, explain why governments are often concerned with high levels of unemployment. [10] (b) High youth unemployment rates are increasingly a problem in many parts of the world. Weak economy, too many graduates and the lack of suitable jobs created are often cited as the culprits. Assess the relative importance of the various reasons for youth unemployment in different countries. [15] 6 Discuss the extent to which economic growth of countries depend more on government policies than the amount of natural resources they possess. [25] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared w here possible. Every reasonable effort has been made to the publisher to trace copyright holders, but if any items requiring clearance have un wittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity.