HWA CHONG INSTITUTION Year 2 Preliminary Examination 2007

ECONOMICS
Higher 2 PAPER 2 Essays 10 September 2007 2 hours 15 minutes
Additional Materials: Paper

9732/02

READ THESE INSTRUCTIONS FIRST Write your name, civics group and the name of your economics tutor 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 staples, paper clips, highlighters, glue or correction fluid. Answer THREE questions. Attempt at least ONE question from each section. You are reminded of the need for good English and clear presentation in your answers. 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.

COVER SHEET
Name : Please indicate the questions that you have attempted. Question No. For Examiners Use Only Marks Initial

CT Class : Econ Tutor :

Total

This document consists of 2 printed pages. HWA CHONG INSTITUTION

Year 2 Prelims 9732_07 HCI 2007

[Turn over

Answer THREE questions in total and at least ONE from each section
Section A (1) In Singapore, the government currently provides low-cost public housing (HDB flats) for 90% of the population. (a) Explain what are public goods and consider whether public housing is an example of a public good. [10] (b) To what extent could government intervention in the provision of housing in Singapore be supported on efficiency grounds? [15] (2) Using appropriate examples, discuss whether firms operating in Singapore should aim to become big to be competitive. [25] (3) The price of a barrel of crude oil has broken through the US$80 mark in recent years. (a) Explain the likely reasons why oil prices rose to record high levels in recent years. [12] (b) Discuss whether the hike in oil prices would necessarily mean a fall in living standards for the average person in Singapore. [13]

Section B (4) The unemployment rate in Singapore increased from 2.7 per cent in 2001 to 4.2 per cent in 2005. (a) Explain the main causes of unemployment in Singapore in recent years. [10]

(b) To what extent could a shift from direct tax to indirect tax reduce unemployment in Singapore? [15] (5) (a) Explain the benefits of a low rate of inflation. [10]

(b) Discuss whether the Singapore government currently adopts the most appropriate economic policies to maintain a low rate of inflation. [15] (6) China unpegged her currency against the US dollar and adopted a managed float exchange rate system in July 2005. The Chinese Yuan appreciated immediately by 2%. Distinguish between a fixed exchange rate system and a managed float exchange rate system and evaluate the possible effects of an appreciation of the Yuan on the Chinese economy. [25]
HCI 2007 9732/02/S/07