YJC H1 Econs Prelim 2008 Question Paper

□ This□question□paper□consists□of□ 7□printed□pages.□ □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□JUNIOR□COLLEGE□YISHUN□ JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE□YISHUN□JUNIOR□COLLEGE □ YISHUN□ JUNIOR□ COLLEGE□ PRELIMINARY□EXAMINATION□2008□ □ H1□ECONOMICS□□ 8816/01 □ □ □ 19□AUGUST□2008□ □ TUESDAY□ □□1400h□–□1700h□ Additional□materials□:□ Answer□booklet□ □ □ □ □ □ □ □ □ □ □ □ □ □ □ TIME□□□□ 3□hours□ □ □ READ□THESE□INSTRUCTIONS□FIRST□ □ Write□your□name□and□CTG□on□all□the□work□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□highlighters□or□correction□fluid.□ □ □ Section□A□ Answer□ all □questions.□□□ Section□B□ Answer□ one □question.□□□ □ At□the□end□of□the□examinations,□hand□in□Section□A□and□Section□B□ separately .□ The□number□of□marks□is□given□in□brackets□[□]□at□the□end□of□each□question□or□part□question.□ □ You□are□reminded□of□the□need□for□good□English□and□clear□presentation□in□your□answers.□ □ □ □ □ □ □ □ □ □

□ 8816/01/YJC08□ 2□ Section□A□ Answer□ all□ questions□in□this□section.□ □ Question□1□□ Oil□and□Petrol□□ □ Extract□1:□Rising□demand□fuelling□global□energy□crisis□ With□oil□prices□approaching□US$100□(S$144)□a□barrel ,□the□world□is□headed□towards□its□third□energy□ shock□in□a□generation.□But□today’s□surge□is□different□from□previous□oil□crises,□with□broad□and□longer- lasting□global□implications.□□ Just□as□in□the□energy□crises□of□the□1970s□and□1980s ,□today’s□high□prices□are□causing□anxiety□and□ pain□for□consumers□and□igniting□wider□fears□about□t he□impact□on□the□economy.□But□unlike□past□oil□ shocks,□ which□ were□ caused□ by□ sudden□ interruptions□ in□ exports□ from□ the□ Middle□ East,□ this□ time□ prices□have□been□rising□steadily□as□demand□for□petrol□grows□in□developed□countries,□as□hundreds□of□ millions□of□Chinese□and□Indian□climb□out□of□poverty □and□as□other□developing□economies□grow□at□a□ sizzling□pace.□□ For□oil□companies,□high□prices□have□sparked□a□frenz ied□search□for□new□sources□around□the□world.□ The□ trouble□ is□ that□ these□ big□ new□ developments□ take□ a□ long□ time,□ and□ companies□ have□ been□ hobbled□ by□ higher□ costs.□ The□ cost□ of□ drilling□ rigs,□ for□ example,□ has□ doubled□ in□ recent□ years.□□ Supplies□ have□ also□ been□ hampered□ by□ political□ tension□ in□ the□ Persian□ Gulf,□ the□ war□ in□ Iraq,□ devastating□ hurricanes□ in□ the□ oil□ producing□ Gulf□ of□ Mexico□ and□ violence□ in□ Nigeria’s□ oil□ rich□ province.□□ Source:□ The□Sunday□Times, □11□November□2007□ □ Extract□2:□US□airline□catastrophe□looms□under□record□oil□prices□ The□ United□ States□ airline□ industry□ is□ set□ to□ crash□as□ record□ oil□ prices□ threaten□ to□ push□ several□ carriers□into□bankruptcy,□an□industry□study□said.□□ According□to□a□study□issued□by□AirlineForecasts□and □the□Business□Travel□Coalition,□at□current□oil□ prices,□several□large□and□small□US□airlines□will□default□on□their□obligations□to□creditors,□beginning□at□ end-2008□and□early□2009.□□The□grim□industry□snapsho t□comes□as□US□airlines□cut□fleets,□jobs□and□ capacity□and□add□fees□as□they□struggle□with□spiralling□jet□fuel□costs□and□a□weak□domestic□economy.□□□□ The□study□shows□that□oil□at□US$130□will□increase□yearly□airline□costs□by□US$30□billion,□while□airlines□ will□ be□ able□ to□ generate□ only□ US$4□ billion□ in□ fare□increases□ and□ incremental□ fees.□ □ Recently□ introduced□bag-checking□charges□and□other□fees□woul d□only□yield□US$1□billion□to□US$1.5□billion□at□ the□industry□level.□□ 'Stabilising□this□ailing□industry□must□become□a□nat ional□policy□priority,'□the□study□said,□calling□on□ the□ White□House,□Congress,□federal□regulators□and□state □officials□to□take□action.□□'Absent□direct□policy□ intervention,□the□likelihood□is□several□airlines□wi ll□fail.□□The□consequences□will□be□devastating□to□U S□ jobs,□families,□businesses,□communities□and□our□American□way□of□life.'□□ Source:□www.straitstimes.com ,□14□June,□2008□ □

□ 8816/01/YJC08□ 3□ Extract□3:□Tax□rise□fuels□petrol□price□fears□□ Petrol□prices□could□surge□to□near□record□highs□foll owing□a□2p□rise□in□fuel□duty.□□The□Petrol□Retailers □ Association□said□the□rise□would□put□an□undue□"strai n□on□motorists□and□petrol□retailers□alike".□It□has□ criticised□the□government's□move,□highlighting□that □petrol□prices□have□risen□steeply□in□line□with□the□ oil□price.□□□ However,□Stephen□Joseph,□executive□director□of□the□ Campaign□for□Better□Transport,□said□the□rise□ was□welcome,□provided□the□extra□money□raised□was□us ed□to□improve□public□transport□and□"other□ measures□that□will□give□people□real□travel□choices" .□□A□Treasury□spokesman□said□the□tax□rise□sent□ "the□right□environmental□signals□in□our□fight□against□climate□change".□□ Source:□ BBC□News ,□01□October□2007□□ □ Extract□4:□Indonesia□inflation□set□to□surge□after□fuel□price□hike□ Inflation□in□Indonesia□is□set□to□soar□in□response□to□a□government□plan□to□hike□the□price□of□subsidised□ fuel,□imperilling□growth□in□Southeast□Asia's□biggest□economy,□experts□said.□□□ The□country's□government□announced□recently□that□it □planned□to□raise□the□fuel□price□due□to□record- high□ global□ oil□ prices,□ which□ are□ causing□ the□ cost□of□ the□ multi-billion-dollar□ subsidy□ scheme□ to□ balloon.□The□increase□comes□on□top□of□the□fallout□from□high□global□food□prices.□□□ Budget□ committee□ chairman□ Haris□ Azhar□ Azis□ said□ the□fuel□ price□hike□ was□ necessary□ to□ prevent□ even□ greater□ damage□ to□ the□ economy□ in□ future.□ □ □ Fuel□ subsidies□ have□ become□ increasingly□ expensive□as□the□price□of□oil□has□surged,□and□are□p rojected□to□nearly□triple□this□year□to□126.8□trilli on□ rupiah□(S$19□billion□dollars),□amounting□to□about□12□per□cent□of□the□state□budget.□□ However,□ there□ are□fears□ that□ a□fuel□ price□ rise□ could□ trigger□ unrest□ in□Indonesia.□ □ Small□ protests□ have□already□started□over□the□latest□plan.□□Police□ and□students□clashed□in□two□cities,□while□peaceful□ rallies□have□cropped□up□around□the□sprawling□archipelago.□ □ Source:□ www.straitstimes.com ,□8□May□2008□ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ Chart□2 :□□ Retail□Petrol□Prices,□US$□per□litre□□ (latest□figures) □ Source: □The□Economist ,□29□May□2008 □ Chart□ 1:□ □ Annual□Change□in□World□Oil□Consumption □ (million□barrels□per□day) □ Source: □The□Economist ,□29□May□2008 □

□ 8816/01/YJC08□ 4□ Questions:□□ (a) □□Describe□the□trend□in□overall□world□oil□consumption□levels□between□2004□and□2007.□□ □□□□□□ [2]□ □ □ (b) □(i)□ □□With□ reference□ to□ Extract□ 1,□ use□ a□ market□ demand□ and□ supply□ diagram □ to□ explain□ the□ causes□of□“today’s□high□oil□prices”.□□ □ □□□□□□ □ □ □ □ □ [ 4]□ □ (ii)□Analyse□the□likely□effects□of□an□i