(2020) A Level H2 Econs CSQ 2 Suggested Answers by Mr Eugene Toh (A Level Economics Tutor)
(2020) A Level H2 Econs Paper 1 CSQ Q2
2020 H2 9757 A Level Economics CSQ2 Suggested Answers Outline
a. Possible answers (any two)
1. Unilateral transfers (e.g. aid)
2. Net income from investments
3. Government expenditure on goods & services
b. As the labour force is characterized to be ‘shrinking’, there will be a likely negative impact on China’s economic growth as the shrinking labour force will result in a fall in productive capacity.
When represented on a PPC curve entire PPC curve shift inwards, allowing for the production of less goods & services
c. A floating exchange rate provides a counteracting force to external shocks.
This is because
1. Assuming a fall in demand for Chinese goods, for example due to tariffs from the US-China trade war
2. This should result in a fall in demand for Chinese currency as a result of the fall in demand for Chinese goods
3. The fall in demand for Chinese currency (illustrate using DDSS diagram) will result in a depreciation of the Chinese currency
4. If the Chinese currency depreciates, it will make Chinese exports cheaper / more price competitive increase in demand of Chinese exports
5. In other words, a floating exchange rate will allow for the Chinese currency to become weaker in an event of a fall in demand due to external events, allowing for partial recovery of exports due to Chinese exports becoming more price competitive from the weaker currency
e. There were 2 supply sides mentioned aimed at Singapore’s labour market.
Re-training of workers
1. The government would likely implement as a supply side policy, subsidies to encourage re-training of workers
2. Workers whose skills have become obsolete will be encouraged to go through retraining, with financial support from the government
3. This will allow such workers to take up jobs in growing sector of the economy e.g. financial technology
4. In terms of making the economy ‘more resilient’ – an ongoing policy like that will likely help to minimize structural unemployment caused by globalization and the automation shift
5. However – such policies to have shortcomings in both planning, implementation and effectiveness as
a. Workers may not be receptive to re-training
b. Proper training programme would likely take time (e.g. a degree programme takes 3 years on average – why would we expect training in a new field to take substantially less?)
6. Such policies are also expensive to implement
Welcome foreign workers who will contribute to more productive parts of labour market
1. The policy here is likely to refer to skilled foreign workers that the Singapore economy might be facing a skills deficit for
2. By revising our immigration policy to be more welcoming and liberal towards foreign workers coming in, it could have potentially a positive impact on economic growth (making the economy more resilient)
3. For example, allowing high tech firms (ByteDance) to hire more foreign workers (computer engineers) from abroad as Singapore currently faces a shortage of computer engineers – could attract more of such similar high tech, high value investments inwards to Singapore increase Investments increase AD increase real NY higher economic growth
4. Skilled foreign workers coming in could also both provide a boost to the productive capacity of the economy and also provide skills transfers which may benefit local workers as well increase LRAS more potential growth
5. Such policies may be hard to calibrate (how many to let in?) & also politically unpopular to implement especially in light of a massive global economic downturn due to the pandemic.
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