2020 H2 Economics Paper 2 Essay 5: 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 likely economic consequences for Singapore of a falling younger population and a growing elderly population, then asks what policy measures the government should take to address these consequences.
An AI guided TYS coach, on every question.
Every ETG student gets access to our AI guided Ten Year Series coach on the ETG learning management system. It walks you through exactly how to approach every single essay question and every single case study question from the last ten years, step by step. TYS Crashcourse students get the same access.
Explain the likely economic consequences of these population changes for Singapore's economy in the future.
A decreasing population under 20 and an increasing population over 65 have significant implications for Singapore, affecting aggregate demand, long run aggregate supply and the government's budget position.
Impact on aggregate demand. As the population ages, more workers retire and the working-age population falls, lowering average disposable income since retirees typically earn less than workers. With a shrinking pool of consumers, overall consumption may fall. Since consumption is a major component of aggregate demand, AD = C + I + G + (X minus M), a fall in consumption shifts AD leftward from AD0 to AD1, lowering real national income from Y0 to Y1 and slowing economic growth. However, in Singapore's context, where domestic consumption is relatively small and import leakages are high, this effect on AD may be less significant.
Impact on long run aggregate supply. The retirement of older workers without a corresponding influx of younger migrant workers reduces the labour force. This diminishes the economy's productive capacity, shifting LRAS leftward from AS0 to AS1, which lowers both real GDP and the full employment level of output.
Impact on the government's budget position. An ageing population raises the demand for healthcare and elderly care, requiring higher government expenditure on social spending and transfer payments. At the same time, as more people retire, the proportion paying personal income tax falls, reducing tax revenue. The combination can worsen the budget position, leading to persistent deficits, greater drawdowns on reserves and a potential reduction in the Net Investment Returns Contribution, limiting the government's fiscal capacity.
Trace the demographic change through AD, LRAS and the budget position, with the appropriate Singapore qualifications.
Discuss the policy measures that Singapore's government should take to address the economic consequences of these population changes on its economy.
- Frame the response as a multi-pronged approach matching policies to the consequences identified.
- Set out a fiscal measure to address the worsening budget position and weigh its trade-offs.
- Set out targeted infrastructure spending that meets the ageing population's needs and raises capacity, then note its fiscal risk.
- Set out a supply-side measure to lift productivity and offset the falling labour force, then note its time lag.
- Reach an evaluative conclusion that calls for a balanced, coordinated mix mindful of long-run trade-offs.
This part is gated. The full model answer with the worked ad and as analysis and the evaluation of each measure, 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 2020 H2 Economics paper 2 essay 5?
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 2020 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.
Get the printable Summary and Diagrams pack.
The notes are free to read because the concepts should be. Join the mailing list for the 112 page Summary and Diagrams pack, drawn the way ETG teaches them, plus new chapters and worked answers as we publish. You can also follow along on Telegram.
Form not loading? Open the sign-up form.