Macroeconomic Issues and Policies

N03
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. [25]
N04
a. Explain what determines the size of the national income multiplier. [10]
b. To what extent might other macroeconomic problems result from the use of fiscal policy that
is designed to reduce unemployment in an economy?
N04
Many countries need to import raw materials and component parts, which become more
expensive if the value of their currency falls against the currencies of other countries.
To what extent have the main macroeconomic problems faced by Singapore in recent years
have been caused by a weakening of the exchange rate? [25]
N05
Discuss the possible impact of a world-wide recession on Singapore and the policy options that
the government could adopt to reduce the most harmful effects of this impact. [25]
N06
In the fourth quarter of 2004 Singapores unemployment rate rose to 3.7%.
Discuss whether supply-side polices are the best way of achieving full employment in
Singapore. [25]
N06
In October 2005 the Monetary Authority of Singapore stated that its policy of allowing the
Singapore dollar to strengthen against a basket of currencies would be maintained.
a. Using a diagram, explain what might cause a countrys exchange rate to appreciate in a
floating exchange rate system. [10]
b. Discuss the extent to which problems are likely to result from an appreciation of Singapores
exchange rate. [15]
N07
a. To be considered successful, an economy needs to achieve low unemployment, low inflation
and stable economic growth. Explain this statement. [12]
b. Discuss whether fiscal policy is the most effective way for Singapore to sustain a successful
economy. [13]

N07
a. Explain the potential causes of a balance of payments deficit on current account. [10]
b. Discuss which measures, if any, a government should adopt when confronted with a current
account deficit. [15]
N08
Discuss the most appropriate policies that a government could adopt to encourage both actual
and potential economic growth. [25]
N08
Discuss the relative significanace of the multiplier, the price elasticities of demand for imports
and exports, and crowding-out in influencing macroeconomic policy decisions. [25]
N09
The relative importance of the components of the circular flow of income for a small and open
economy, such as Singapore, is likely to be different from a large and less open economy, such
as the USA.
a. Explain this statement. [10]
b. Assess whether a change in the external value of its currency is more likely to have a larger
impact on Singapore or the USA. [15]
N09
Economic measures of the Singapore economy for 2007 indicate that GDP was S$243 billion.
The current account of the balance of payments was S$59 billion in surplus.
a. Explain how you might use GDP and balance of payments data to measure the performance
of an economy. [12]
b. Assess whether these economic indicators are the ebst measures of economic performance
and standard of living in Singapore. [13]
N10
The recent worldwide recession caused many governments to re-assess their use of fiscal
policy in order to stimulate their stagnating economies.
a. Explain what would reduce the effectiveness of fiscal policy as a stimulus to the Singapore
economy.
b. Assess alternative policies that might be more appropriate in managing the Singaproe
economy when faced with a worldwide recession. [15]
N10
When there are large increases in the prices of oil and other primary products, they are usually
expected to lead to rising inflation throughout the worlds economies.
Discuss the extent to which these factors are likely to affect the rate of inflation in Singapore.
[25]

N11

a. Explain the process whereby an increase in government expenditure can lead to a

bigger change in national income. [10]
b. Discuss the extent to which conflicts in government macroeconomic objectives limit
the scope for the use of fiscal policy in any economy. [15]
N11
In the study of macroeconomics, investment can take many forms including foreign
direct investment, fixed capital investment and investment in human capital.
a. Explain what is meant by these different types of investment. [10]
b. Discuss how far supply-side policies can be used to stimulate these different types of
investment. [15]
International Economics
N03
For many years the USA did not conduct normal trading relations with Vietnam. In 2001 a trade
agreement was signed between the two countries which reduced tariffs, encouraged foreign
investment and opened up export markets.
a. How does the theory of comparative advantage explain why a developed country such as the USA
might wish to trade with a developing country such as Vietnam?
(12)
b. Discuss what effects such a trade agreement might have on the economies of the participating
countries.
(13)
N05
Discuss how the Singapore government might use the concepts of price elasticity of demand and
income elasticity of demand to determine the impact of a fall in exchange rates and a rise in
worldwide incomes on the current account of the Singapore balance of payments. (25)
N07
Discuss whether Singapore is among the countries to have the most to gain from globalization. (25)
N08
a. Explain the determinants of the pattern of trade between Singapore and the rest of the world. (10)
b. Discuss whether the Singapore government should change its policies for managing the balance
of payments.
N09
An economist stated The trend towards globalisation leaves no room for protectionism.
a. Account for the trend towards globalization. (10)
b. Discuss whether you agree with the economists view. (15)

N10
There is a general consensus among economists that protectionism is a bad thing.
a. Explain why protectionism exists. (8)
b. Assess the extent to which the Singapore governments approach to international trade may need
to be adjusted in response to a growth in worldwide protectionism. (17)
N11
The Singapore economy is open to the world, in trade and investment. This is both a matter of policy
and necessity because of our size and limited resources. In 2008, our trade to GDP ratio was 360%,
the highest in the world.
(Ministry of Trade and Industry, Singapore, 2009)
Discuss whether the openness of the economy is beneficial or harmful to the standard of living in
Singapore. (25)