EAns - General (Macro)

1. SCOPE over depth (Give EVERY factor in extract, give MULTIPLE effects Eg. Skills upskilling = +ve EG, lower cost-push inflation, reduce income inequality -> inclusive growth + improve nm-SOL)

2. ALWAYS finish with effect (Eg. Tariff -> fall in demand for X -> (X-M) falls -> AD falls causing -ve AG)  

Indicators to compare nm-SOL between developed countries and developed VS developing countries

• Developed: uni graduates, bed occupancy ratios 

• Developed VS developing: literacy rate, mortality rate 

Factors to determine whether m or nmSOL more important:

Stage of economic development, economic outlook 

Limitations of using UN

Limitations of using UN: nature of jobs (Eg. Part time VS full time and HSW VS LSW), discouraged workers (leave labour force -> UN falls BUT SOL constant)

Limitations of using CPI inflation rate:

Limitations of using CPI inflation rate: weight basket does not affect spending patterns, income may increase

Discuss whether inflation is most important factor affecting SOL (NO data given) 

• R1: Inflation leads to worse X-M -> AD falls -> real GDP and mSOL falls 

• R2: EG more impactful 

1. DON'T USE (If DATA given): Population living below national poverty line, CPI, EG + NO AD/AS for data question

2. If part a) downward multiplier, then part b) upward multiplier = write AGAIN (ugh)

3. Can add snippets of AD (in a mainly AS paragraph) 

• Eg. FDI: Also increase AD -> With both the AD and AS rising, sustained EG can be achieved, even if the economy was initially operating near full employment

Adult literacy rates 

1. Adult literacy rates 

• Refers % of the population aged above 15 who can both read and write with understanding a short, simple statement about their everyday life -> suggests better education -> better career prospects, social mobility and quality of life 

EROR dependent on… 

1. EROR dependent on… 

• Cooperate tax rate 

• Technological advancement 

  • Product or process innovation gives rise to new business opportunities -> expectation of higher yield from the investment

  • Eg. Advancement in 3D printing leads to increased capacity in manufacturing industries because of time saved (design can be sent directly to production) and increase operational efficiency by reducing the number of spare parts businesses need on hand

  • Higher EROR through I in additive manufacturing technology as it is an alternative to traditional manufacturing

• Outlook on economy 

• For FDI: ease of doing business, political stability 

Explain how price stability increase future SOL

• Price stability -> ensure inflation rate does NOT exceed existing nominal IR for savings causing real IR to become positive -> preserve PP of savings of households -> households who keep majority of savings in bank will be able to consume more G&S in future -> future SOL increase 

• real interest rate = nominal interest rate − inflation

• Context to aging population (if in question): especially important for the retired have to rely on savings in their later years to consume G&S

1. Issues of conflicting macroeconomic goals can be overcome if there are enough policies to match the number of objectives that the government wants to achieve

• Eg. SG government can implement SS policies to reduce inflation should there be a conflict between EG and inflation 

2. Pursuit of price stability = POLICIES 

3. Increasing GST is to AVOID an increase in fiscal debt 

Incentives to adopt green technology 

Patents -> prevents other firms from copying the technology and competing in the market for the technology -> allow firms to capture the returns of the substantial cost of investment -> incentive firms to develop technologies -> SS increase -> price falls -> more firms switch to green technology

Policies to achieve inclusive growth

1. target lower income (Eg. Mean-based transfer payments) (NO CDC, it is given to everyone) 

• Use as add-on (if you got extra time): progressive income tax system -> higher income finances the transfer payment via tax 

1. Further tightening of monetary policy (extra contractionary) = draw 3 AD lines even for reduce dd-inflation 

2. R&D subsidies -> assuming wage rates constant -> UCOP falls

Meaning of FEDadopt cooling measures

FED (US central bank) adopt cooling measures (overheated economy -> combat DD-inflation -> contractionary IR policy)