2017 H2 Economics Paper 2 Essay 6: Suggested Answers
How to use these essay answers. The responses below, including the part (a) answer, are structured guides to the requirements of the question, the content, analysis and evaluation a strong answer must cover, rather than full essay prose with a written introduction and conclusion. Use them to see what to include and how to build the argument, then write it up in your own continuous prose, adding your own introduction and conclusion.
This essay explains the internal and external factors likely to have contributed to Singapore's slowdown in economic growth in the second quarter of 2015, then asks whether policies aimed at raising the growth rate might cause difficulties for the economy.
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Explain the internal and external factors that are likely to have contributed to this slowdown in the economic growth rate.
The fall in Singapore's growth from 2.8 per cent to 1.8 per cent in the second quarter of 2015 reflects a mix of internal and external factors.
Internal factors. First, the economy was at near full employment, with unemployment hovering around 2 to 3 per cent. At this level, further increases in aggregate demand feed more into inflation than into real output, because the economy's capacity to produce is already close to its maximum, limiting the scope for growth. Second, the government's policy of reducing reliance on foreign labour, through higher foreign worker levies and lower dependency ratio ceilings, slowed the growth of the labour force. This restructuring towards higher productivity slowed the growth of long run aggregate supply, limiting the economy's potential to expand and so contributing to the slowdown.
External factors. The year 2015 saw a slowdown in global incomes and in the incomes of Singapore's trading partners. For a highly trade dependent economy, this reduced demand for exports. With exports a large component of GDP, weaker global and regional demand meant a smaller increase in net exports, a smaller rightward shift in aggregate demand, and so a smaller rise in real national income, which an aggregate demand and supply diagram would illustrate. Together these internal and external factors moderated Singapore's growth in 2015.
Develop at least one internal factor (near full employment or slower LRAS growth from labour tightening) and the external factor of weaker global demand for exports.
Discuss whether the policies aimed to increase the economic growth rate might cause difficulties for Singapore's economy.
- Frame growth as needing both demand side and supply side policy, and signpost the difficulties each can bring.
- Develop the expansionary fiscal policy route with a diagram in words, then weigh its risks near full employment.
- Develop the supply side route with a diagram in words, then weigh its short run cost pressures.
- Bring in the concern of overheating in a small open economy.
- Weigh the growth gains against the risks to macroeconomic stability.
- Reach an evaluative judgment on how the policies should be managed to avoid difficulties.
This part is gated. The full model answer with the worked aggregate demand and supply analysis and the evaluation, with the diagrams and the full evaluation, is in the ETG TYS Answers book from SAP and is worked live in the TYS Crashcourse. ETG students also get the AI TYS coach that guides them through this exact question. Message the team to find out more.
Tests: Fiscal policy, Supply-side policies
Questions students ask
Where can I get the full worked answers to the 2017 H2 Economics paper 2 essay 6?
The full model answers, with the diagrams and the higher mark evaluation, are in the ETG TYS Answers book published by SAP and sold at Popular, and are worked live in the TYS Crashcourse. Every ETG student also gets the AI TYS coach on our learning management system, which guides you through how to tackle every essay and every case study question from the last ten years.
Are these the official 2017 A Level Economics answers?
No. SEAB sets and marks the A Level paper. These are suggested answers by Mr Eugene Toh, author of the H1 and H2 A Level Economics TYS answer keys, published by SAP and sold at Popular.
How should I use these suggested essay answers?
Treat them as a guide to the requirements of the question, the content, analysis and evaluation a strong answer must cover, not as full essay prose. Write the essay up in your own continuous prose, with your own introduction and conclusion.
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