May 2024

In 2007 the rate of Goods and Services Tax (GST) in Singapore rose from 5% to 7%. Incomes also increased in that year. Explain the likely effect of this change in GST on expenditure by consumers on different types of goods.                      

Increase in GST à fall in supply illustrated by a leftward shift of SS (non-parallel shift) Illustrate with a diagram. Explain diagram. Eqm price of goods increase and eqm qty fall, cp. The impact on total expenditure (TR)  may rise or fall depending on the PED of goods. Goods with price elastic demand i.e. PED …

In 2007 the rate of Goods and Services Tax (GST) in Singapore rose from 5% to 7%. Incomes also increased in that year. Explain the likely effect of this change in GST on expenditure by consumers on different types of goods.                       Read More »

Discuss whether the use of tariffs is the best option to reduce both a trade deficit and a budget deficit.            

Protectionist measure –  tariff – Define tariff  and explain how it works : Evaluation: Other policies: – Trade policy : FTAs Evaluation:             – Supply-side policies Evaluation:             – Exchange Rate policy Evaluation:             – Other policies : contractionary fiscal or monetary policy : reduce Y => lower             Purchasing power => reduce consumption (both …

Discuss whether the use of tariffs is the best option to reduce both a trade deficit and a budget deficit.             Read More »

Explain the key macroeconomic aims of the Singapore government and discuss which policy measures might best be used to overcome the most significant macroeconomic problem that is currently being experienced by the Singapore economy.           

Explain and elaborate on the key macroeconomic aims of the Singapore government and explain the consequences of not achieving these aims High level of employment Low inflation Steady rate of economic growth Satisfactory balance of payments position Minimum fluctuations in exchange rate Discuss which policy measures might best be used to overcome the most significant …

Explain the key macroeconomic aims of the Singapore government and discuss which policy measures might best be used to overcome the most significant macroeconomic problem that is currently being experienced by the Singapore economy.            Read More »

Explain the sources of market power.

Intro Body Artificial Artificial barriers are created by existing firms or the government, to limit the entry of new firms. E.g. Patents Governments may impose tariffs / quotas on certain imports to reduce foreign competition and so increase the market power of domestic firms in those industries. (e.g. rice in Japan) Natural Vast geographical distances …

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Explain how globalisation may be a cause of inflation in Singapore.

Introduction: Body: 1) Effects of globalisation that could cause demand pull inflation. •      With globalisation, Singapore experiences an increase in trade volume. Access to a larger market allows exporting firms to reap economies of scale and with lower cost; exports can be priced more competitively. With a rise in net exports, it will lead to …

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Discuss whether the Singapore government adopts appropriate policies to achieve its microeconomic aims.              

This question requires students to analyse, evaluate and discuss the microeconomic aims of the Singapore government while offering different points of view. The appropriateness of the policies especially with regards to achieving the microeconomic aims must be evaluated and analysed. Students anticipating the higher end of the marks are expected to discuss a variety of …

Discuss whether the Singapore government adopts appropriate policies to achieve its microeconomic aims.               Read More »

Discuss the extent to which monopoly is a realistic market structure in Singapore.

The characteristics of a monopoly Show long run equilibrium of a monopoly. (Diagram) Monopolies are bad for the consumer: Explain the negative consequences of a monopoly Therefore consumers are disadvantaged. Monopoly is more beneficial for the consumer: Explain the advantages of a monopoly Monopoly as a realistic market structure in Singapore Students should discuss the …

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“Inflation is harmful to an economy and hence it should be the priority of the Singapore government to reduce inflation.” Discuss.

Inflation has many adverse effects which is harmful to an economy. This includes adverse consequences on economic growth, employment, balance of payment and exchange rate. à currency depreciate à worsen imported inflation v  Explain that mild demand-pull inflation may not be harmful to the economy. (Optional) Hence it can be seen from the above that …

“Inflation is harmful to an economy and hence it should be the priority of the Singapore government to reduce inflation.” Discuss. Read More »

Discuss the significance of the multiplier in influencing macroeconomic policy decisions to achieve economic growth.

Introduction Macroeconomic policy decisions are made by governments for the purpose of achieving specific macroeconomic goals, namely full employment, price stability, high and sustained economic growth, exchange rate stability, and a healthy balance of payments (BOP). These decisions  can be affected by the size of the multiplier as well as other factors such as the …

Discuss the significance of the multiplier in influencing macroeconomic policy decisions to achieve economic growth. Read More »