2022 H2 Economics Paper 2 Essay 4: 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 how a fall in investment can lead to one type of unemployment while a rise in innovation-based investment leads to a different type, then asks the extent to which higher Singapore government spending on major capital projects and on human capital are both required to reduce unemployment in a post-pandemic world.
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Explain how a fall in investment might lead to one type of unemployment while a rise in innovation-based investment might lead to a different type of unemployment.
Unemployment is a situation where a person can work and is actively seeking work but cannot find work. A change in investment patterns can lead to different types of unemployment: a fall in general investment can cause cyclical unemployment, while a rise in innovation based investment can cause structural unemployment.
Cyclical unemployment from a fall in investment. Investment is a component of aggregate demand. A fall in investment, caused by economic uncertainty and pessimism such as during the COVID-19 pandemic, reduces aggregate demand. The AD curve shifts leftward from AD0 to AD1, lowering real national output, for example from full employment Yf to Y1. As demand falls, firms cut production and need less labour and other inputs, leading to layoffs and a rise in cyclical unemployment, which is directly tied to the downturn and the fall in demand for goods and services.
Structural unemployment from innovation based investment. Investment in innovative technologies, such as automation and artificial intelligence tools, represents a shift towards more advanced and automated systems. These technologies can make certain jobs obsolete, for example some writing or analysis roles. While demand rises for skilled workers in fields like artificial intelligence, programming and data science, displaced workers may lack the skills to move into these roles. This produces structural unemployment, characterised by a mismatch between the skills of the workforce and the needs of the labour market. Unlike cyclical unemployment, which is tied to the business cycle, structural unemployment stems from fundamental changes in the economy such as technological innovation.
Define unemployment, link a fall in investment via lower AD to cyclical unemployment, and link innovation based investment via job displacement and skills mismatch to structural unemployment.
Discuss the extent to which a rise in Singapore government spending on investment in major capital projects and in human capital are both required to reduce unemployment in a post-pandemic world.
- Frame the question as whether both forms of spending are needed and against which types of unemployment each works.
- Set out how spending on major capital projects works through aggregate demand and the type of unemployment it targets.
- Set out how spending on human capital works through productive capacity and the different type of unemployment it targets.
- Argue why relying on only one form of spending leaves part of the unemployment problem unaddressed.
- Bring in Singapore's external exposure as a reason a balanced domestic approach adds resilience.
- Conclude on the extent to which both are required, framed as a balanced and complementary approach.
This part is gated. The full model answer with the worked ad and as 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, Unemployment
Questions students ask
Where can I get the full worked answers to the 2022 H2 Economics paper 2 essay 4?
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 2022 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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