RVHS_H2_ECONS_P2_Essay_Q5_Soln

1 2017 Y6 H2 Prelim II Essay Q5 (Section B) Suggested Mark Scheme (a) Knowledge, Application/ Understanding and Analysis L3 Developed explanation of how size & openness influence the effectiveness of DD -mgmt policies and thus account for why economies rely on policy mix to different extent ‘Developed’: (i) Use multiplier process as a tool of analysis to illustrate how size & openness affects k (ii) Highlight how differing values of k determine the effectiveness of DD-mgmt policies and thus the need for other policies 8-10 L2 Undeveloped explanation of how size & openness influence the effectiveness of DD -mgmt policies and thus account for why economies rely on policy mix to different extent ‘Undeveloped’: (i) Missing assumptions/ incomplete or superficial explanation for multiplier process (ii) Fail to link back to the question by contrasting between economies with different k and what this implies about the extent of policy mix pursued 5-7 L1 Smattering of valid points *Answers without explanation of multiplier process will only be in Level 1 1-4 (b) Knowledge, Application/ Understanding and Analysis L3 Developed discussion of at least 2 factors (including size & openness) that have influenced Sg’s choice of policies to achieve price stability ‘Developed ’: Explicit link between (i) Small & open economy to the use of X ∆ rate policy + inability to use conventional MP (Thesis) (ii) Causes of inflation to appropriate policies e.g. SSP/ Macro prudential policies (Anti-thesis) 8-10 L2 Undeveloped discussion OR developed explanation for one side (either thesis or anti -thesis) ‘Undeveloped ’ – Superficial link between factors and policies to achieve price stability 5-7 L1 Smattering of valid points 1-4 E3 Arrives at an analytica l, well -reasoned judgement about the relative importance of various factors (including size & openness) in influencing policy choice to achieve price stability 4-5 E2 Makes some attempt at a judgement about how important the size & openness of Sg is in influencing policy choice to achieve price stability 2-3 E1 Unsupported statement about the importance of size & openness in influencing policy choice 1 Economists often distinguish small and open economies, such as Singapore, from large and less open ones. (a) Explain how size and openness could account for why economies pursue policy mix to different extent. [10] (b) Discuss how far the size and openness of Singapore have influenced her choice of policies to achieve p rice stability. [15]

2 Suggested answer points: (a) Intro • State the implication of being ‘small, open economies’. Specifically, for a country like Spore: o Small domestic mkt o Lacking in natural resources such as land o Implication: Need to be open to trade, capital and labour flows • In contrast, state the implication of being ‘large & less open economies’. Spec