EAns TP1

Missing tax

Tax imposed will lead to a shortage at the initial price resulting in an upward pressure on price. As price rises, Qd falls and Qs rises until a new market equilibrium at higher price and lower output Q

Describe limitation of tax: prefer to use “hurt EG and employment level” given context given in extracts 

• As seen in Extract 4, the garment industry is a major driver of economic growth in Bangladesh, with the industry employing about 4 million workers, and the garment industry 80% of Bangladesh’s total export revenue

• Given the significance of the garment industry in Bangladesh -> tax will increase UCOP -> fall in AS -> GPL increase -> real-GDP falls 

Increase in real GDP from FDI may cause nm-SOL to fall = use context given in extract 

• “Workers have always been paid low wages” and minimum wage that “is not enforced in many factories”

This means…

Increases in income would be disproportionately enjoyed -> uneven income distribution

1. MISSED: AD increase -> real GDP increase -> population size constant, real GDP per capita increase -> mSOL 

2. Explain why the government is concerned about… = EFFECTS 

Missing: Effect of UN

• Workers who have been structurally unemployed for a long time may become discouraged and leave the labour force -> workers may leave the country in search of better jobs causing brain drain -> fall in productive capacity further as the labour force shrinks

• Due to the decrease in both quantity and quality of labour in the long run, the productive capacity decreases, LRAS decreases

Missing: Effect of healthcare on nm-SOL 

• Access to healthcare reduced -> more likely to suffer long wait times at clinics and hospitals, and so are more likely to be stressed or suffer worsened health conditions -> fall in quality of life and nm-SOL

Missing: PPP explanation 

• PPP is defined as the rate of currency conversion that equalises the purchasing power of different currencies by eliminating the differences in price levels between countries. 

• To compare the SOL between US and Singapore, PPP refers to the number of currency units required to purchase an amount of G&S equivalent to what can be bought with USD$1

• It takes into account the difference in the cost of living between the US and Singapore.

• If GDP per capita at PPP rates for Singapore is higher than that for the US, the SGD equivalent of 1 USD can buy more G&S in Singapore than in the US

• So average Singapore resident has higher PP and has greater access to higher quantity and quality of G&S -> more satisfaction and utility than an average US resident -> higher mSOL 

Missing: AQI indicator explanation 

• This might be caused by the pursuit of self-interest by firms and consumers which causes them to omit consideration of negative externalities in their decision making

• Example: If there is greater production by heavy industries, it leads to more air pollution that harms the health of the residents

New: nmSOL indicator eval (Leisure time and environment)

• Eval: Subjected to reporting bias by different governments

• Leisure hours: Difficult to fully capture true mental well-being -> number of working hours ignores other factors such as commute time and the intensity of work

• The importance of "leisure" and "environmental quality" are subjective and depend on the stage of development of the economy. 

• A society in a developing stage might prioritise industrial jobs (mSOL) over clean air (nm SOL), making a direct comparison of non-material SOL across different stages of economic development using such indicators highly value-laden and imprecise

Data collection Cambodia VS SG

Eg. Data collection problems: In developing countries like Cambodia, the data collection methods used may be primitive and data may not be as readily available as compared to Singapore, which is likely to use more advanced and accurate means of accounting for our national income

Discuss whether a higher real GDP growth rate would necessarily mean that Singapore can better achieve inclusive and sustainable growth

• Assume real GDP from higher I -> AS increase (no need to explain AG, its in the question!) 

• Real GDP increase does NOT mean employment opportunities for all 

• Inclusive growth: Creation of productive employment opportunities for the majority of the population = skills upgrading 

• WHY prioritise this macro goal (use economic characteristics)

Missing: High government revenue leading to sustainable growth (do NOT say: build green tech) 

• Higher fiscal capacity allows the government to provide grants and incentives to encourage firms to adopt green technologies, which help reduce carbon emissions and environmental damage

• Such spending ensures that the benefits of growth are more widely shared and that economic expansion does not come at the expense of environmental sustainability

Missing: High government revenue leading to sustainable growth SG EVAL

• Given ageing population, which places increasing demands on public expenditure for healthcare and social services

• Higher growth allows the government to meet these commitments without excessive reliance on government debt or sharp tax increases -> inclusive growth more fiscally viable