MJC_H2_ECON_P2_P

______ Econ Paper 2 Additiona ______ READ T Do not o Write yo Write in d You may Do not u Answer t either Se The num ______ MERI D Prelim Highe _________ nomics al Materials: _________ HESE INSTR open this boo ur name, civi dark blue or y use a soft p se staples, p three questio ection A or S mber of marks _________ DIAN JUN minary Exam r 2 _________ Answer Boo _________ RUCTIONS F oklet until you ics group and black pen. pencil for any paper clips, h ons in total, o Section B. s is given in b _________ Th IOR COLL mination __________ oklet/Writing P __________ FIRST u are told to d d register nu y diagrams, g highlighters, g of which one brackets [ ] __________ his documen LEGE _________ Paper _________ do so. mber on all t graphs or rou glue or correc e must be fro at the end of _________ nt consists of _________ _________ the work you ugh working. ction fluid. om Section A f each questi _________ 3 printed pa _________ 2 2 _________ hand in. A, one from S ion or part qu _________ ges. _________ 973 1 Septembe Hours 15 M _________ Section B and uestion. [T _________ _____ 32/2 er 2011 Minutes _____ d one from Turn Over] _____

2 9732/02/JC2 PRELIMINARY EXAMINATION/MJC/2011 Answer three questions in total Section A One or two of your three chosen questions must be from this section. 1 China has implemented a policy to reduce production of rare earth metals which are used in the production of X-ray machines, iPhones and light bulbs. Incomes have risen in recent years, especially in the emerging economies. Discuss the relative impacts on consumers and producers due to the above changes. [25] 2 (a) Explain whether it is always advantageous for a firm to grow in size. [12] (b) Discuss how you would decide if a firm is exerting its monopoly power. [13] 3 To solve income inequality, the USA uses a minimum wage law while Singapore believes that improving t he skills of workers is the best solution. (a) Explain why income inequality is a source of market failure. [10] (b) Using economic theory, analyse whether the above view is justified. [15]

3 9732/02/JC2 PRELIMINARY EXAMINATION/MJC/2011 Section B One or two of your three chosen questions must be from this section. 4 Singapore government supply-side policies have created a more dynamic and flexible labour market. Between 2003 and 2010, unemployment fell from 4.0% to 2.1% but inflation rate rose to 2.8 %. (a) Explain how supply-side policies can lower the level of unemployment. [10] (b) Discuss whether the Singapore government should ever be concerned about the economic consequences of falling unemployment. [15] 5 Some economies have balance of payments deficits while others have balance of payments surpluses. (a) Explain the importance of a sound balance of payments