HCI H2 ECONS Essay Question P2

© Hwa Chong Institution 2016 9732/02/S/C2 Prelim 2016 HWA CHONG INSTITUTION JC2 Preliminary Examinations Higher 2 CANDIDATE NAME CT GROUP 15 CENTRE NUMBER INDEX NUMBER ECONOMICS Paper 2 ESSAY Additional Materials: Answer Paper 9732/02 15 September 2016 2 hours 15 minutes READ THESE INSTRUCTIONS FIRST Write your name, CT group, Centre and Index numbers clearly in the spaces at the top of this page and on every page you hand in. Write in dark blue or black pen on both sides of the 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. Begin each question on a fresh sheet of writing paper. At the en d of the examination, fasten the answer sheets to each essay question separately together with the 3 cover pages provided. If you only attempt 2 essays, please submit a nil return with the 3 rd cover page, indicating the possible essay question you would have attempted. If you only attempt 1 essay, please submit 2 nil returns with the other 2 cover pages, indicating the possible essay questions you would have attempted. 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 2 printed pages. [Turn over

© Hwa Chong Institution 2016 9732/02/S/C2 Prelim 2016 2 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 (a) Explain how free trade helps to alleviate the problem of scarcity. [10] (b) In the recent decades, technological advancement has helped to promote the spread of information and economic integration has facilitated labour migration. Discuss the extent to which the above events could help t o reduce resource misallocation arising from imperfect information and immobility of factors of production. [15] 2 In recent years, the price of natural fertilisers for organic brown rice production has risen and healthy living campaigns are seeing more consumers switching from non-organic white rice to organic brown rice. Assess the relevance of elasticities of demand and supply in understanding the impact on the expenditure by consumers on non-organic white rice and organic brown rice. [25] 3 There are five movie theatre operators in Singapore and they are making efforts to protect their profits in view of rising competition from online movie streaming services. (a) Compare the barriers to entry of movie theatre industry and online movie streaming industry. [10] (b) Discuss the likely impact on profit of a movie theatre operator when faced with competition from online movie streaming services. [15] Section B One or two of your three chosen questions must be from this section. 4 (a) Explain how the relative importance of the components of the circular flow of income for a small and open economy might be different from a large and less open economy. [10] (b) Assess the usefulness of the components of the circular flow of income to com pare different countries’ standard of living. [15] 5 Discuss whether the use of various policies by governments will inevitably lead to conflicts in macroeconomic objectives. [25] 6 Some countries like China use interest rate s while others like Singapore choose exchange rate s as their instrument for monetary policy. (a) Explain how consumers, producers and government of a country could be affected by the appreciation of its own currency. [10] (b) Discuss why governments use different instruments of monetary policy to control the rate of inflation. [15] 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 t o 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.