(2021) A Level H1 Econs CSQ 2 Suggested Answer by Mr Eugene Toh (A Level Economics Tutor)

(2021) A Level H1 Econs Paper 1 CSQ Q2

Disclaimer: The answers provided on our website is a 'first draft outline’ version of the answers provided for your convenience.

For the full, finalised answers, please click here to purchase a hard copy of the Comprehensive TYS Answers authored by Mr Eugene Toh and published by SAP. (The page might take awhile to load)

Search for “COMPREHENSIVE ANSWERS TO A LEVEL H1 ECONOMICS YEARLY EDITION” to purchase.

CSQ2: Economic issues in Malaysia

ai.        “real” means that the GDP growth figures have already been adjusted for inflation.

aii.       Malaysia is generally seeing relatively high & positive economic growth of between 4% - 7% from 2007 to 2018.

            Malaysia, like other countries, is seeing a slowdown in economic growth in 2019 but growth, at 5%, remains higher than many other developed countries.

b.         Unemployment increased in 2009 and fell in 2019.

            Inflation fell (negative) in 2009 and increased sharply in 2010.

            Illustrate on AD-AS diagram

            A decrease in Consumption in 2009 will cause AD to fall  fall in AD  fall in real NY

            As firms hire less factor inputs  increase in cyclical unemployment

            When AD shifts left  general price level falls

            An increase in Consumption 2010 will cause AD to increase  increase AD  increase in real NY

            As firms hire more factor inputs  fall in cyclical unemployment

            When AD shifts right while economy is near full employment level  general price level increases

c.         Supply side policy - increase productivity

1.     Productivity can be increased by subsidizing / giving workers incentive to undergo retraining / upgrading

2.     As workers skills improve  increase productive capacity  LRAS shift right  higher growth

3.     As wages go up for workers  increased purchasing power  improve material SOL

            Supply side policy – improve infrastructure

1.     Government spending on infrastructure can improve business connectivity / attractiveness as a destination for foreign direct investments

2.     Increase G increase AD  increase real NY  higher economic growth  improvement in material SOL

3.     Improvements in infrastructure such as in public transport networks / rail links can also improve non-material SOL for individuals as they spend less time travelling

d.         Fall in export competitiveness

As the ringgit becomes stronger – Malaysian exports become more expensive  reduce exports competitiveness  Increase in Px  fall in demand for X  fall in (X-M)  fall in AD  fall in real NY  lower economic growth

As economic growth falls  fall in disposable incomes  fall in purchasing power  fall in material SOL 

As firms hire less factor inputs  reduced hiring of labour inputs  rise in unemployment

Higher unemployment  more social anxiety  fall in non-material SOL

Higher unemployment  reduced ability of the unemployed to purchase goods & services  fall in material SOL

e.         Figure 2 actually shows income inequality (measured by GINI coefficient) improving over time, from a high of above 0.55 in 1976 to a low of 0.40 in 2014. 

            Figure 3 shows that Malaysia has higher income inequality (measured by GINI coefficient) compared to other countries in ASEAN except Singapore & Philippines.

            The perception that the gap between the rich and the poor in their country is getting wider is likely to be incorrect as the data shows that income inequality has in fact been improving in Malaysia. 

            The comment that it is a big problem could be in relation to the higher income inequality in Malaysia compared to other countries in ASEAN.

 Want the full answers to the 10/12 marks TYS questions? Click here to purchase a hard copy of the Comprehensive TYS Answers authored by Mr Eugene Toh and published by SAP. (The page might take awhile to load)

Found our TYS answers useful?

Unlock success with the ETG A-Level H1 Economics TYS Crashcourse, the ultimate guide for students aiming to excel in their A-Level Economics examinations. Tailored for H1 Economics students, this crash course dives deep into past papers, providing expert guidance on case study analysis and essay structuring. Gain access to recorded video lessons, comprehensive TYS answers, and personalized feedback to boost your grades. With a focus on H1 A-Level Economics TYS, economics tuition in Singapore, and proven strategies for acing the exam, this crash course will help you achieve your academic goals. Sign up today!