NYJC H2 ECONS P2

J2 H2 Economics (9757/02) 1 PRELIMINARY EXAM 2017 JC2 Economics H2 (9757/02) NYJC Paper 2 - Essay Wednesday 20 September 2017 08:00 – 10:15 TIME : 2 hours 15 mins INSTRUCTIONS TO CANDIDATES Write your name, class and name of economics tutor in the space provided on the writing paper. Do not use staples, paper clips, glue or correction fluid/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. The number of marks is given in the brackets at the end of each question or part question. Write your answers on the writing papers provided. At the end of the examination, fasten all your work securely together. There are 3 printed pages including this cover page

J2 H2 Economics (9757/02) 2 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 Restaurant owners are now crying woes in Singapor e as their profit margin has been hit hard due to rising rental and food costs. However, their most pressing issue is the lack of manpower and to make things worse, consumers are now tighten ing their belts due to the negative growth rate for the first quarter of the year. But not all hope is lost. With the rise of online food deliver y services, restaurants owners are now partnering them in the hope of attracting more customers. (a) Explain, using examples, the concepts of price elasticity of demand and income elasticity of demand. [10] (b) Discuss how the combination of the above factors affect the market for different types of restaurant services in Singapore [15] 2 (a) Explain how the level of competition influences firms’ price and output decisions. [10] (b) Assess whether a firm’s behaviour is always de pendent on the actions of its rivals. [15] 3 (a) Using examples, explain the basis by which ra tional decisions are being made by consumers and producers [10] (b) Assess the economic case for government interv ention in the market when externalities are present [15]

J2 H2 Economics (9757/02) 3 Section B One or two of your three chosen questions must be from this section. 4 Germany took in 1.1 million migrants in year 2015. The government will spend 12 billion euros on accommodating and integrating them in year 2016 in the midst of a decline in exports hit by global economic weakness. Furthermore, Germany’s in flation rate may reach the European Central Bank 2 percent price stability ceiling in y ear 2016. It is unlikely to stay there for long as there are price pressures far weaker elsewhere in the European region. Source: various (a) Explain how the combination of a decline in export revenue and an increase in government expenditure could affect the circular flow of income in Germany. [10] (b) Discuss whether an economy’s inflation rate is more likely to be determined by domestic or external factors. [15] 5 It is the economy-wide productivity consequences of technological improvement, not technological improvement per se, that lifts standard of living. Assess the extent to which higher labour productivi ty are likely to improve standard of living in Singapore. [25] 6 The United States has run a large deficit on the current account of its balance of payments for several years. (a) Explain what might cause a persistent and larg e deficit on the current account of a country’s balance of payments. [10] (b) Discuss the view that policies to deal with su ch a deficit can be ineffective and potentially damaging. [15]