YJC H1 ECON P

This question paper consists of 8 printed pages 1 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 JC2 PRELIMINARY EXAMINATION 2011 ECONOMICS 8819/01 Higher 1 22 AUGUST 2011 TIME: 3 hours Additional materials : Writing paper INSTRUCTIONS TO CANDIDATES Write your name, CTG and index number in the spaces provided on the cover page and on all the work you hand in. Write in dark blue or black pen. You may use a soft pencil for any diagrams, graphs or rough working. Do not use highlighters, glue or correction fluid. Section A Answer all questions. Section B Answer one question. At the end of the examination, tie your cover page on top of the answer scripts before submission. 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.

This question paper consists of 8 printed pages 2 Section A Answer all questions. Question 1 Coal Industry in Australia Extract 1: World market for coal Coal prices have shot up a further 34 per cent. Last week, coal benchmarks hit all-time highs in the US, Europe and Asia. In China, winter of punishing snowstorms and power shortages led Beijing to suspend coal exports for at least two months. In addition, China is also closing down unsafe and inefficient coal mines, restricting supply until enough new or refurbished mines can be opened. Flooding at major mines in Australia since mid-January has dramatically stunted a major coal producer's exports to Asian markets. Power shortages and blackouts in South Africa amid rising demand there have curtailed exports to Europe. In Russia, another major coal producer, rail-car shortages have frustrated attempts to meet growing world demand. As a relatively cheap - and abundant - alternative to oil, coal is sought in rapidly industrialising nations such as Brazil, India and Vietnam as well as China. Even though the use of cleaner-burning alternatives is on the rise, fast-growing energy consumption is expected to underpin coal demand. Some experts say coal prices could rema in high or even keep rising through 2009 or beyond, weighing on the already slowing world economy. Coal now fuels about 40 per cent of the world's electricity production. Its share of the world's energy diet is rising even though it is a leading source of greenhouse gases. Source: The Wall Street Journal, 13 February 2008 Figure 1: World coal prices Year 2005 2006 2007 2008 2009 Coal Market Price (US dollar per tonne) 60.54 64.11 88.79 147.67 70.66 Source: McCloskey Coal Information Service Extract 2: Australia’s coal industry Coal plays a pivotal role in the Australian economy. Valued at $22.5 billion, it is the largest single export, with about 30% of world total coal export trade and 4.6% of world consumption. The coal industry supports more than 130,000 employees who are either engaged in the production of coal or are in jobs servicing the coal industry, such as in transport, the equipment and services sector a nd engineering works. Moreover, electricity prices are among the lowest in the world as coal fuels 84% of electricity and thus providing a major source of Australia’s international competitiveness and economic development. However, coal prices have been skyrocketing globally over the past few years, and even though Australia utilizes local coal reserves for the production of electricity, the economics of an interconnected global marketplace mean that increases in international coal prices are being felt by local electricity suppliers as well. These increased costs are then passed onto the Australian businesses and households in the form of higher electricity bills.

This question paper consists of 8 printed pages 3 Source: Australian Coal Association, February 2008 Extract 3: Australia’s China entanglement No country in Asia or the Pacific is more clearly a beneficiary of China’s industrial revolution than is Australia. Its coal fuels the power stations that keep that revolution churning. China is Australia’s second largest export market, with huge potential for growth. Chinese demand for Australia’s mineral riches drove the long boom that ended last year due to the global recession. However, it still provides Australia’s best hope of avoiding the worst of the slump that has followed. Last November, when China announced its first big, 4 trillion Yuan ($586 billion) economic stimulus in response to the global economic downturn, Kevin Rudd, Australia’s prime minister, was among the foreigners cheering l oudest, calling it “very good news”. The sense of relief was understandable. Taking goods and services together, China is now Australia’s biggest trading partner. The slump may slow this trend down, but not change its direction. Source: The Economist, 30 April 2009 Figure 2: Australia’s selected economic indicators Source: The Economist, 16 October 2008 Extract 4: Urgent action on climate change Australians are the world's worst individual greenhouse gas polluters if emissions are calculated from the output of the country's power stations, according to new analysis. Each Australian produces nearly 11 tonnes of CO2 power sector emissions. Australia was urged to adopt without delay a broad-based greenhouse gas emissions trading scheme in as many industries as possible, including the energy and transport sectors. Professor Ross Garnaut, the Australian government's chief climate change adviser, said that climate change was already having a huge impact in Australia. He also warned that some of the country’s most celebrated tourist destinations, environmental jewels such as the Great Barrier Reef and the wetlands of Kakadu in the Northern Territory, might be lost. Besides emissions trading scheme, it would also be in Australia's interest to support rapid deployment of commercially promising "carbon capture and storage" technologies. When coal is combusted, they emit carbon dioxide (CO 2). To prevent this CO 2 from entering the

This question paper consists of 8 printed pages 4 atmosphere and contributing to climate change, the CO 2 can be captured at the power station by such technologies and be st ored safely and permanently in deep underground geological structures, or by other physical, chemical or biological means. The professor acknowledged t