Economics paper 2

Thefire521 SG

Quite interesting but very argumentative.

Really depends how u argue but Q6 is really contextual. If you realise, singapores economy is now not doing well so domestic economy shd suffer (ad shd fall)

Overall think bell curve this time is lower.

ArJoe SG

Not a very tough paper in general.
For 2a, just writing positive externalities and underestimation of substantial true private benefits(merit good) should suffice? No time to write inequity though

For 2b, i think i didnt really wrote antithesis well. I wrote for thesis how less funds may be diverted towards education and building world class infrastructure instead, which may adversely affect productive capacity etc, leading to some macro goals not be attained. While it may be financed by individuals, individual disposable income falls since they have to pay higher taxes to the government, they can only consume less goods and services etc, material sol is adversely affected. Government may also accumulate national debt etc, more funds need to be paid for debt interest payments to holders of govt bonds
anti thesis was like how the govt have accumulated substantial reserves due to our strong bop surplus lol
other than that qn 5 and 6 which i did was pretty alright i guess.

ArJoe SG

Qn 5a my point was pretty much expansionary fp to achieve actual growth which fuels inflationary pressure, hurt export price competitiveness and affect bop, while supply sidesuch as research and development can lead to structural unemployment due to occupational immobility
5b was straightforward.

Thefire521 SG

I tink its manageable, but the problem is this is argumentative, so you dont know what cambridge will accept and what they will not accept.

Q5 was pretty easy except for the fact that they requested you to propose alternative measures SG government can go for and also asked you to analyze EFFECTIVENESS, and not the policy itself, so your entire essay cannot just be talking on status quo (e.g singapore government increase producitivity...) there must at least be 1 or 2 factors on alternative policies and analyze its effectiveness/not effective.

I would think there are many macro conflicts possible but the major ones are

1). Growth and price stability

2). Price stability and BOP

3). Growth and unemployment

Q6 was the tricky one because current account can either worsen/improve or remain the same. 6b was the even trickier one because it required you to analyze from the depreciation AND appreciation and to realise that the Singaporean economy now is not doing well, so likely malaysia's currency affect us the most because it is our largest and closest trading partner. You must also explain this clearly.

As for market failure, part a was easy, but inequity should be more important than imperfect information. Every of such essay should contain an efficiency point and an equity point. However, there shouldn't be much penalisation.

As for part b, opportunity cost does look easy, though the question is did you manage to substantiate up to 15 marks worth. There would be a need to bring in scarcity, perhaps elaborate on PPC and also why there would be opportunity costs in the first place...

ArJoe SG

The reason why i wrote imperfect info for 2a is because healthcare is a merit good, the most obvious source of mkt failure is definitely imperfect info thats why..
6a just argue both sides i think. It can directly hurt export price competitiveness, and thus worsen bop, but it can also helps to lower your price of imported raw materials etc, lowering your cop and translating into lower price of your exports instead.

for 3b i think there is no need to talk about ppc. The main argument should be about the negative effects i believe, spending less on education lower labour productivity etc.. and about how consumers have to pay higher taxes and so on..

well for 6b depreciating against us and china will definitely fuel import price push inflation, since we rely heavily on these countries for our raw materials.. can further link cost of production to investments and how they affect economic growth, kfa,etc
appreicating against malaysia will lower our domestic cost of living, due to cheap import of food etc

robin.van.persie SG

Oh freak. I made a careless mistake. I wrote that we appreciate against USD/RMB and depreciate against Yen/Ringgit. Argh!!!!!!!!!

Will I get any marks? Or just 1 or 2 out of 15?

Omg...... :'(

Thefire521 SG

6a Agreed.

2a They should accept any 2 points. But imperfect info is similar to positive externality, i think equity is a better point. Efficiency and equity should be present. Equity is very important in healthcare.

2b Yeah lorh but hard to just write effects for 15 marks bro

6b isnt as easy because there are multiple countries. I would think malaysia is a bigger trading partner than US/China, if you check out the list Malaysia is the top trading partner. I dont think we import much from USA actually, but more from Malaysia (vegetables etc) and Japan. (remember recently Singapore government going to Hokkaido)

The hard thing is not on telling them the effects of the appreciation, but how do you determine the "likely effects" as the question requested for. You mentioned one will increase import price push inflation and one will decrease domestic cost of living, so you must judge in the end does it fall or rise?

Also they requested for an analysis of domestic economy, so you should link to Malaysia being more important so an appreciation of our currency against theirs will lead to a large fall in export, causing AD to fall whereas the other country are smaller trading partners.

Also you can talk about the fact that if the Singaporean curency is stronger, it could cause malaysian/japanese companies to avoid coming to singapore to set up factories/invest due to the larger start up cost involved as one unit of their foreign currency is converted to fewer units of domestic currency, that is how you link to overall economy not doing as well.

As for USA and china depreciation, likely we will begin to export more to USA and china since our exports are now cheaper in terms of US dollar and renminbi but because malaysia and japan are our bigger trading partners, its likely the effect of the appreciation is worse than that of the depreciation against us dollar/renminbi.

Thefire521 SG

Oh freak. I made a careless mistake. I wrote that we appreciate against USD/RMB and depreciate against Yen/Ringgit. Argh!!!!!!!!!

Will I get any marks? Or just 1 or 2 out of 15?

Omg...... :'(

Hi robin, i am sorry, i think that was the one of the biggest mistakes i thought someone could make but i believe they should still give marks for explaining the effects of appreciation/depreciation.

Thefire521 SG

Also i think its not good to repeat the part about depreciation and appreciation. Just talk about one side and theres no need to repeat again depreciation causes exports to be cheaper etc.

Focus on the domestic economy.

Thefire521 SG

Also i think its not good to repeat the part about depreciation and appreciation. Just talk about one side and theres no need to repeat again depreciation causes exports to be cheaper etc.

Focus on the domestic economy.

but its okay. Only 6b was slightly tricky. I am sure if you got the other questions right, one can still score a 8/9 out of 15 for this question and A is still very possible.

Thefire521 SG

i thought the best questions were 156

ArJoe SG

Well i interpreted impacts on domestic economy on the 5 macro goals, hence i talked about inflation, economic growth etc, how they are affected by the appreciation or depreciation. I didnt really have time to make a complete judgement on which outweighs which, hence i think i may only get 2/4 for evaluation marks though.

ArJoe SG

I am very worried about 2b, i am not sure whethee my points are acceptable or not omg… nut i know many ppl got stuck at 2b too

theophilus SG

Wahhh, isit fine if I argue that the depreciation against US and China is due to them having massive xport growth potential and malaysia and japan for our heavy imports from them??

Also, for conflict its fine if I say growth conflicts with micro goals like allocative effec and income inequity rite ?

Thefire521 SG

5 macro goals is correct. That is the safest way of interpretating it but i dont think they need u to talk about all 5 goals. Just the major ones like growth bop and price stability. Some goals might also contradict each other. Lets say u have more import price push inflation but when growth is reduced theres also less dd pull.

I think the question was asking for the likely effects so an L3 response will definitely require evaluatiom

Thefire521 SG

Wahhh, isit fine if I argue that the depreciation against US and China is due to them having massive xport growth potential and malaysia and japan for our heavy imports from them??

Also, for conflict its fine if I say growth conflicts with micro goals like allocative effec and income inequity rite ?

For conflicts. No. Because they wanted macroeconomic growth objectives. Allocativr efficiency is micro level

For 6b. I think they asked for effects of the appreciation and depreciation and not the causes.

robin.van.persie SG

Hi robin, i am sorry, i think that was the one of the biggest mistakes i thought someone could make but i believe they should still give marks for explaining the effects of appreciation/depreciation.

Sigh. My depth I thought was good though. I brought in three - government expenditure, net exports, as well as investments. Though my arguments suggested appreciating against the USD......

I also did evaluate, I said Singapore's economy is experience a slowdown so the appreciation effects against USD > depreciation effects against Yen and Ringgit......

Any idea how much I could get? Or I will be capped at a L1 (i.e. max 5/15)?

Thefire521 SG

Sigh. My depth I thought was good though. I brought in three - government expenditure, net exports, as well as investments. Though my arguments suggested appreciating against the USD......

I also did evaluate, I said Singapore's economy is experience a slowdown so the appreciation effects against USD > depreciation effects against Yen and Ringgit......

Any idea how much I could get? Or I will be capped at a L1 (i.e. max 5/15)?

Likely capped at L1. They cannot give above that no matter how good the arguments if the question was intepretated wrongly. Therefore all the things you said were refering to the wrong country so of course the arguments would become invalid since the sing dollar depreciated against us dollar...

I would think they will be extremely vigilant for students who flipped as they probably had set the question thinking many will fall for the trick.

On the other hand dont worry u can stl score an A if the rest buttresses this mistake.

robin.van.persie SG

Oh...cos my teacher said there is some error carried forward rule with the marking for such cases...so if you interpret wrongly, then could they still give?

Thefire521 SG

Oh...cos my teacher said there is some error carried forward rule with the marking for such cases...so if you interpret wrongly, then could they still give?

Thats the part i said. They will give u marks for explaining appreciation and depreciation. Thats all. But not above l2. The explanation marks are part of l1

Its just like general paper. If u interpret the q wrongly they dont error carry forward and let u change the q haha