NYJC_2008 Prelims Exam_H1 Econs

1 PRELIMINARY EXAM 2008 NYJC Economics JC2 H1 (8816) PAPER 1 Tuesday 16 Sep 2008 1400 – 1700 TIME : 3 hours 00 mins INSTRUCTIONS TO CANDIDATES Do not open this paper until you are told to do so. Write your name, class and name of economics tutor in the space provided on the writing paper. Answer all questions. The number of marks is given in the brackets at the end of each question. Write your answers on the writing papers provided. If you use more than one sheet of paper, fasten the sheets together. You are advised to spend several minutes per question reading through the data and questions before you begin writing your answers. There are _8_ printed pages including this cover page

2 Section A Answer all questions in this section Question 1 Oil and Its Effects Extract 1: Oil hike reaches ‘tipping point’ Last week the price of oil hit a new high of US$135 (RM434) a barrel, causing alarm bells to go off. The oil price is now six times higher than in early 2002. The oil price has reached the “tipping point” at which it is deeply affecting economies as a whole in many ways. The oil price trend is expected to continue “as confidence that supplies can meet demand in the next five to ten years crumbled”, according to a Financial Times report. One positive point amid all the gloom is that this rising oil price is making renewable energy sources such as wind and solar more and more viable. If these can take an increasing share of the energy market, that will be good for the fight against climate change. Source: The Star Online, 26 May 2008 Table 1: Exposure of Asian economies to oil in 2007 Oil Export Oil Import Oil trade balance % of exports % of GDP % of imports % of GDP % of GDP Malaysia 8.9 8.4 8.0 6.3 2.1 Singapore 17.7 32.8 21.1 34.3 -1.5 Indonesia 11.0 2.9 29.4 5.1 -2.2 China 1.0 0.4 10.3 3.0 -2.6 Hong Kong 0.2 0.3 2.6 4.6 -4.3 Thailand 3.7 2.3 15.6 8.8 -6.5 Source: CEIC, CIMB/CIMB-GK Research, 2007 Note: Oil is defined as petrol and petroleum products Extract 2: Petrol sales fall as drivers feel the pinch British motorists are shunning their cars and clearly driving less following a doubling in crude oil prices over the past year, the International Energy Agency said on Tuesday. Petrol retailers have disclosed that volume of fuel sales has slumped by as much as 20 per cent over the past 12 months. According to the IEA, motorists are instead choosing to take public transport as their cars become too expensive to run. The analysis provides some of the first hard evidence that motorists are realising that they have to change their behaviour in response to the sharp rise in petrol prices. Source: The Guardian, 11 June 2008

3 Extract 3: EU tackles aircraft CO2 emissions Aircraft produce about 3% of EU CO2 emissions - more than refineries or steel plants They also emit nitrogen oxides which lead to the formation of another greenhouse gas, ozone. Airlines operating in the EU should pay for any increase in their carbon emissions above current level