E-Learning Day 2015 H2 Economics

Name:Class:

Task 1: Research on Macroeconomics Problems

1) Pick 2 of the following countries/regions:a) United Statesb) Chinac) Singapored) Japane) Eurozone

2) Research online for any 1 macroeconomic policy (fiscal policy, monetary policy, trade policy, or supply side policy) that has been used by your chosen country and fill up the following tables.

a) Country 1: ____China_____________

Type of policyYear of implementation Short description of the policyImpact on the economy (explain using AD/AS analysis)Possible limitations of the policy

Expansionary fiscal policy2015Chinas economy is slowing down. Last year's growth rate - 7.4% down from 7.7% in 2013 - was the weakest in 24 years.China's central bank has cut interest rates for the second time this year as the economics continues to slow down. It lowered its interest rate to 5.1% compare to previously 5.35%.As the interest rate decrease, people are expected to save less and spend more. Hence increase consumer consumption which will lead to increase in demand.Firms are expected to receive more investment and the cost of borrowing decrease the return of investment will increase. Hence as investment increase, demand will increase. Overall, the demand will increase. China is trying to shift its economy focus into domestic demand so that it can rely less on external demand therefore less venerable to external struck in the future. Chinese have the mind-set of saving money for future use. Even the government cut the interest rate, the people may not be responsive to consume more. The government need to work on to provide better social supports such as better and cheaper health care so that people will be more willing to spend money rather than save it.

Source:

b) Country 2: ____Singapore_____________

Type of policy(Fiscal, monetary, trade, or supply side)Year of implementation (What were the economic circumstances in that year?)Short description of the policyImpact on the economy (explain using AD/AS analysis)Possible limitations of the policy

Contractionary monetary policy2011GDP growth surges together with increasing inflation rateIt recentered the trading band below the level of the Singapore dollars nominal effective exchange rate. Singapore dollars appreciated as a result.As the economy of Singapore was heating up during that period, contractionary monetary policy will appreciate Sing dollars. Hence, the price of export will increase, lead to decrease in demand for export. The price of import will decrease, hence increase demand in import. (X-M) will decrease, hence demand will decrease. Price level will decrease. Inflation is eased.If demand for exports and imports are price inelastic, net exports and AD will rise as a result of stronger currency. This, in turn, may exacerbate the high inflation rate.

Source: < http://www.sharesinv.com/articles/2011/04/14/singapore-tightens-monetary-policy-gdp-inflation-growth/>

Email your completed worksheet to chen_jiayi@acjc.edu.sg by 4:30pm on 12th May 2015