YISHUN JUNIOR COLLEGE

JC2 PRELIMINARY EXAMINATION 2009

H2 ECONOMICS 9732/02
PAPER 2: Essay Questions 21 August 2009

TIME: 2 hours 15 mins

Additional Materials : Answer Paper

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

READ THESE INSTRUCTIONS FIRST

Write your name and CTG on all the work 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 highlighters or correction fluid.

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.

At the end of the examination, fasten all your work securely together.

The number of marks is given in brackets [ ] at the end of each question or part question.

This paper consists of 3 printed pages

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Answer three questions in total

Section A

One or two of your three chosen questions must be from this section.

1 The growth of internet shopping gathered pace enormously in 2007. In UK, the
Interactive Media Group (IMRG) estimates that consumers spent £53 billion online
during the year, an increase of 75% on the previous year.

Economics Today, Mar 2008

(a) Using economic theory, explain the increase in consumer expenditure in the online
retail market. [12]
(b) To what extent is the internet making markets more competitive? [13]

2 The existence of many small travel agents, each working well below-capacity, is a
sign of inefficiency.

(a) Using diagrams, explain the short-run and long-run equilibrium positions of a firm in
the travel agency industry. [10]
(b) Discuss the view that greater efficiency would result if the travel agency industry
showed more characteristics of a monopoly. [15]

3 Discuss, with economic reasons to support your arguments, whether the Singapore
government currently adopts the most appropriate policies in the provision of
healthcare. [25]

Section B

One or two of your three chosen questions must be from this section.

4 Singapore’s trade-sensitive economy has entered a recession for the first time in six
years due to the impact of the worsening US financial crisis and the deepening credit
crunch. Singapore will have an expansionary budget next year to help its citizens
cope with weaker economic growth.

Source : Channel News Asia (6 November 2008)

(a) Explain how an expansionary budget can be used to bring an economy out of a
recession. [10]
(b) Discuss whether an expansionary budget is the best policy the Singapore
government can adopt to deal with the recession caused by the ‘worsening US
financial crisis and the deepening credit crunch.’ [15]
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5(a) Explain why economic growth is regarded as a major macroeconomic objective

by most governments. [10]

(b) Discuss the view that, in the long run in Singapore, the macroeconomic objectives of
economic growth, price stability, full employment and a strong balance of payments
can be achieved without conflicting with each other. [15]

6 The United States should not be indifferent to the fact that rising currency values (of
other countries) can threaten economic prosperity in those countries, but the right
solution to this problem is to encourage our trading partners to stimulate their own
domestic economies, rather than to keep the dollar overvalued and let them achieve
export-led growth at our expense.

Testimony on the impact of overvalued dollar on the American economy

by Robert A. Blecker 9 Mar 2003

(a) Explain how ‘rising currency values can threaten economic prosperity’ in a country.
[10]

(b) To what extent is the assertion that the United States should ‘encourage trading
partners to stimulate their domestic economies, rather than to keep the US dollar
overvalued’ valid? [15]