HCI H2 ECONS Essays QP

© Hwa Chong Institution 2018 9757/02/S/C2 Prelim 2018 HWA CHONG INSTITUTION JC2 Preliminary Examinations Higher 2 CANDIDATE NAME CT GROUP 17 CENTRE NUMBER INDEX NUMBER ECONOMICS Paper 2 ESSAY Additional Materials: Answer Paper 9757/02 13 September 2018 2 hours 15 minutes READ THESE INSTRUCTIONS FIRST Write your name, CT group, Centre and Index numbers clearly on every sheet of answer paper that you hand in. Write in dark blue or black pen on both sides of the answer paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid and 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. Start each question on a fresh sheet of writing paper. At the end of the examinat ion, fasten your answers to each essay question separately with the strings provided. If you only attempted 2 essays, please submit a bl ank piece of writing paper (nil return) for the 3 rd essay, indicating your full name, CT group, centre number, index number and the question number of the essay question you would have attempted if time had permitted. If you only attempted 1 essay, please submit 2 of such nil returns. The number of marks is given in brackets [ ] at the end of each question or part question. You are advised to spend several minutes reading through the questions before you begin writing your answers. You are reminded of the need for good English and clear presentation in your answers. This document consists of 3 printed pages and a blank page. [Turn over

© Hwa Chong Institution 2018 9757/02/S/C2 Prelim 2018 2 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 The world has spent an estimated $2 trillion on dam s in recent decades. Many nations built dams to control floods, improve irrigation, alle viate water shortages and generate low-carbon hydroelectricity. But recent studies have shown that most ly people living upstream are benefiting from the capture of river flows at the expense of those downstream. Dams also cause decay to the surrounding areas leading to lar ge emissions of greenhouse gases such as methane that contributes more to global warming than carbon dioxide. (a) Use the concepts of public goods and imperfect informati on to explain why price mechanism fails to allocate resources efficiently in the provision of dams. [10] (b) Assess the determinants that a rational decision-making government should consider in allocating resources to build a new dam. [15] 2 In 2014, Malaysia ended its decades -old petrol and diesel subsid ies and price caps in an attempt to save billions of dol lars to reduce its fiscal defic it. However in 2017, motorists welcomed the government’s statement that should the retail prices of petrol and diesel exceed RM2.50 per litre continuously for three months, such measures would be reintroduced. (a) Explain the impact of a subsidy and a maximum price on consumer surplus and producer surplus. [10] (b) In view of rising fuel prices, discu ss whether the Malaysian government should reintroduce petrol and diesel subsidies or price caps to keep fuel prices in check. [15] 3 International trade is a drivi ng force behind economic growth. According to the World Trade Organization (WTO), there are around 420 regional trade agreements in force around the world in 2016 in which barriers to trade and foreign direct investment are lowered. (a) Explain the cost savings for firms and industries that might arise when their countries are in regional trade agreements. [10] (b) Discuss the likely impact of regional trade agreements on the profitability and efficiency of firms. [15]

© Hwa Chong Institution 2018 9757/02/S/C2 Prelim 2018 3 Section B One or two of your three chosen questions must be from this section. 4 In April 2016, despite 18th consecutive months of negative inflation arising from lower oil and car prices and a soft property market, the Singapore government did not show any intention of intervening to boost prices. On the other hand, Japan embarked on another round of extensive monetary expansion as t he familiar 25 year-old threat of deflation resurfaced after a brief period of consumer price growth. (a) Explain the possible causes of deflation. [10] (b) Discuss the different approaches used by the two governments. [15] 5 In 2016, the Singapore government raised the personal income tax rate for the top income earners of a chargeable annual income of over S$320,000 from 20 percent to 22 percent. At the same time, those who earned a chargeable annual income of S$28,000 and below automatically received a higher amount of Goods and Services Tax (GST) cash voucher. Besides, the government expected a deficit of S$5.6 billion (1 .4% of GDP) and thus Fiscal Year 2016 was an expansionary budget. Assess the importance of automatic fisca l stabilisers in determining whether discretionary fiscal policy should be used to reduce business cycle fluctuations and achieve inclusive growth in Singapore. [25] 6 In recent years, the refugee crisis is slowly undoing decades of economic integration by generating a new wave of protectionism that is believed to have shocked the global economy. Discuss the likely impact of protectionism on the economic growth, inflation and standard of living of an economy. [25] Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made to the publisher to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity.