Question: Macro econ pg 1 Q3. 25m.


"Intergrated resorts ................. can the completed integrated resorts achieve the various macroeconomic goals for Singapore"

Key word : completed ( so writing about the process of building IR would be out of point for the whole essay ).

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Approach :
Prove to a large/small extend.
+ve vs -ve impact --> balanced response OR SR vs LR

Note: Questions with impact on macroeconomics goals --> AD/AS approach + conflict among goals.

-Identify and define : 4 Macro goals [ Stability and growth especilly ]

Respond to sign-post:
-Projects successfully bidded by Las Vegas Sand and Genting International. Increase SG GDP by 1.5 billion.
-Drive growt and create employment in SG.

Thesis: Explain how the development would help achieve the macro-goal of the SG govt.

Injection:
Devt of IR --> build infrastructure, promote tourism --> boost tourist receipts/consumption --> C,I,X increase --> Increase in AE --> national income increase ( multiplier effect ) --> attain actual growth --> generate substantial employment opportunities --> increase household income --> trigger off further spending --> encourage EG.

Anti-Thesis:
-Evaluate limitations of small k [ High MPM, MPS ]
-conflict wit other macro-goals --> D-pull inflation.

LR:
-IR can directly/indirectly affect FDI.
-Increase in capital stock --> increase productivity capacity --> Increase in AS

Low unemployment:Thesis:
- cyclical UnN --> AD falls and ff cut back on their production. Wages are "sticky"
- Injection into circular flow --> expansion in both output,capacity --> provided that there is excess capacity (if not may lead to d-pull inflation if im not wrong)

High sustained growth:

Anti-Thesis:
-Seasonal UnN : IR increases SG reliance on seasonal industries.
-Structural UnN: mismatch of skills, not suitable or retrenched SG workers, re-training is required ( S-side policy )

Inflation:

Thesis: Cost push --> Persistent increase in cost independent of AE.
IR --> Bring in more forex --> Increase in D for SG dollars --> .... --> Stronger SG $ act as bulwork against increasing cost of imports.

Note: SG govt have ability to manage exchange rates but D for SG $ is not very high in the first place.

High sustained growth:

Anti-Thesis: In LR, as AS increases, any inflationary pressure would be reduced.

Conclusion:-Decision to build IR made through cost-benefit analysis.
--> consider not only macro impacts but also the -ve externalities etc pollution in the building process or gambling when it is completed
--> Govt estimates such problems ( "putting figures in things that are intangible" )
--> Lastly, IR was built as Benefit > Cost and since there is net +ve benefit, there could be sustained growth of SG over time.