TJC_QP_H1_Prelims08.TJC

TEMASEK JUNIOR COLLEGE PRELIMINARY EXAMINATION 2008 ECONOMICS: 8816/01 PAPER 1 Wednesday 17 September 2008 1400-1700 Hours READ THESE INSTRUCTIONS FIRST Do not turn over until you are told to do so. Write your name and CG number on all the work you hand in. Write in dark blue or black pen. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Section A Answer all questions. Section B Answer one question. At the end of the examination, fasten your work for each question in Section A separately. Fasten your work for Section B and the Cover sheet together. For each question, write your answer on t he separate paper provi ded. Hand in your answer to each question separately. The number of marks is given in bracke ts [ ] at the end of each question or part question. This document consists of 7 printed pages. [Turn over

Section A Answer all questions in this section. Question 1 Rice Crisis The soaring price of rice and dwindling stockpiles of Asia's basic food are causing anxiety across the region. Figure 1: Prices of commodities * TJC Preliminary Examination 2008 2 *Urea: Artificial fertilizer Extract 1: Structural factors driving food prices What are the structural factors underlying the surge in food prices, aside from the direct impact of high and rising oil prices? Some economists cite factors such as rapid economic growth, urbanization, neglected agricultural sectors and climate change. The structural explanation for rising prices of cereals is evident in the case of rice – global rice stocks have fallen and are expected to reach 25 year lows at just 70 milli on tons this year, down from 150 million tons in 2000 (USDA 2008). Offsets of course are likely on the supply side but only if relative prices are allowed to provide the correct signals to farmers. Adapted from The Asian Development Outlook 2008 by Asian Development Bank

Extract 2: Globalisation under fire Trying to curb soaring food prices at home, India, China, Egypt, Vietnam and Cambodia have imposed export bans. This will make it tough for poor, rice-importing countries, in Africa as well as Asia, to secure supplies. In India, the government there also, has stepped in to punish hoarders; action has been initiated against supermarkets trying to put restrictions on retail trade so that they can export more at higher prices. The government hopes that its actions will increase local supplies, thereby curbing price rises. Such curbs may be politically expedient, but they are economically self-defeating. They demotivate farmers which disrupt global supply. Globalisation, is once again on trial and this time it appears to be under heavy fire. Adapted from