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J2 H1 Economics (8819/01) 1 PRELIMINARY EXAM 2011 JC2 Economics H1 (8819/01) NYJC Monday 12 September 2011 0800 - 1100 TIME: 3hour 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. The number of marks is given in the brackets at the end of each question. Write your answers on t he 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 before you begin writing your answers. Section A Answer all questions. Section B Answer one question. There are 9 printed pages including this cover page

J2 H1 Economics (8819/01) 2 Section A Question 1 Income Inequality in China and Singapore Extract 1: Bank Warns of Effects of Rising Food Prices on Asia According to Asian Development Bank, sharp rises in food prices are a threat to economic growth in Asia and could push millions of people into extreme poverty. Food prices in Asia have increased an average of about 10 percent so far this year, which the bank calculates could force 64 million people below the poverty income threshold of US$1.25 per person a day if prices remain at current levels. Asia is a major contributor to global inflation and is vulnerable to its effects. Economic growth in China and India is blamed for pushing up prices of many commodities. The region’s population density and uneven income distribution make people there especially susceptible to spikes in food prices, Mr Changyong Rhee, the chief economist of the bank said. The poor in Asia typically spends about two-thirds of their income on food. Source : Adapted from The New York Times, 25 April 2011 Figure 1: Asia 10* – Per Capita Income and Food Expenditure Source: DBS Group Research *Asia 10 – SG: Singapore, HK: Hong Kong, KR: Korea, TW: Taiwan, MY: Malaysia, CH: China, IN: India, TH: Thailand, ID: Indonesia, PH: Philippines

J2 H1 Economics (8819/01) 3 Figure 2: Asia 10* – Food Trade Balance Source: DBS Group Research Extract 2: Chinese Government Promises to Close Income Gap BEIJING: A Chinese government report on effective measures to smooth the redistribution of social wealth by increasing the income of rural and needy people was handed to the legislators on Friday. The government expects to raise farmers’ income by increasing the minimum purchasing price of farm produce offered by the state reserve. In 2010, the minimum purchasing price for every 50kg of wheat will be raised by 3 yuan (0.44 US dollars) and that for rice will also be raised accordingly. The gov