EAns CSQ 2 (All J2)

Using PPC, explain benefits of hosting Olympics (using extract) (and graph)

• With a construction boom -> increase I and G as more facilities and infrastructure are built in anticipation of the wave of people -> real output increase -> AEG -> shift from A to B 

• Increase PC -> PEG -> shift in PPC

Using a diagram, account for the “rising usage of food delivery services” in the online food delivery services market in Singapore

• [1] Increase DD

• [1] Increase SS 

• [1] Diagram 

• [1] Rise in demand and supply reinforce each other to lead to a rise in equilibrium quantity (NO MAP)

1. Discuss how increase in governments’ spending on infrastructure may have different impacts on the real national income of Singapore and India = FACTORS (multiplier, spare capacity etc.) 

2. Discuss whether disbursement of cash aid to boost economic growth was appropriate = yes, boost EG + no, cause demand-pull inflation (NOT no EG)

Explain how it affects exchange rate of India = in perspective of INDIA 

Eg. US IR increase -> hot money outflow into US from India -> SS rupee increase -> depreciation

Crude oil price increase -> oil M increases as PED inelastic -> sell more rupee to buy USD to pay for oil imports -> SS rupee increase -> depreciation

Components of current account

G&S balance, primary and secondary income balance

State change in nominal ER of Taka (currency of Bangladesh) and whether current account balance causes this change

• Depreciated 
  

• No 

• Current account deficit of Bangladesh decreased until it became surplus -> this indicates that either X increase (increase DD domestic currency) / M decrease (decrease SS domestic currency) -> currency should appreciate

Discuss whether you agree with the view that globalisation is reversible

1. R1 (Reversible): Reduction in trade flow due to: 

• Protectionism 

  • Cause domestic firms to keep production in the home country instead of shifting factories to other countries

  • If firms were to produce overseas and ship products back to home markets, the tariff imposed would make their goods more expensive -> eroding benefit of lower cost from overseas production -> keep production in the home country

• Advancement in technology domestically -> prices comparable with overseas markets

• Changing consumer preference towards personalisation and fast delivery (extract) -> consumers more willing to pay higher prices for domestically produced customised goods -> manufacturing would shift more local -> reduced FDI 

2. R2 (Not reversible): FTAs