MJC08s105

Econs SOW

2009-08-16T20:01:00.000+08:00

Week 8

Content: Macroeconomic Problem,policies
Skills:CSQ

(t1): Post portem on mock exam macro essay question + post mortem on mock exam CSQ macro

(t2): Time trial on macro CSQ

(t3): Time trial on macro CSQ + post mortem

Week 9:

Content: Macroeconomic problem, policies
Skills: Essay

(t1): More tricky issues, implications of international trade, globalization

(t2): Essay trial

(t3): Essay trial

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I will print out the scheme of work for everyone on mon

~Zhongye

Econs scheme of work

2009-08-03T20:33:00.000+08:00

Week 6:

(T1 Tues) Answer planning on PCMS Essay ( those not covered in lectures )

(T2 Weds)*: Essay No.5 + Essay No.6 from Market Failure - to go through problems and solutions more thoroughly

(T3 Thurs): Writing Test on Market Failure CSQ

Logistics: Yellow workbook. Lecture notes units 10,12 . All past exams, exam answers, and tutorials pertaining to market failure.

Week 7:

Content: Economic Issues

-Significance of various problems.
-causes of various problems.
-governments' priorities
-examples

Skills: Essay - Part (a) type

Logistics: First day period lost due to National day holiday-in-lieu

Week 8:

Content: policies

-fiscal policies (touch up on automatic stabilizers + crowding-in effect)
-Brief revision on Monetary policy
-supply side policies - labour. international competitiveness

Skills: Essay

Week 9:

Trade issues and globalization
-demand/supply framework
-protectionism

Case study skills in macro.

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I will photocopy for everyone the sow tmr.

Econs homework

2009-07-20T19:49:00.002+08:00

I will print the econs scheme of work till date for tutorials tommorow. Reminder that tmr (tuesday) there is econs case study during the econs lecture. For tommorow's double period, we will be going through the yellow book qn 5b essay. So try to prepare so that things can go faster.

Also, there will be extra econs lesson on fri after the chem revision lecture at 2pm ( inclusive of temperature taking ).

MYEs

2009-06-29T11:41:00.001+08:00

good luck folks.

econs

2009-06-15T00:59:00.001+08:00

those who had their stuff on me etc they never collect, please message me for a time and venue for me to pass it to you. For the vj casestudy wksht, gary cp and hui min wksht are with me so msg me for it.

~zhongye

For those who skipped econs on 20/5

2009-05-20T20:04:00.003+08:00

There is attendance taking at the end of the session and I have wrote that everyone is present. So I am guessing that Raj or Mr Lin will ask about it TMR. So, make an effort to read through the post below that I had typed. It is not complete but at least go through it.

Sidenote: Btw, despite the promises by the teachers to put those slides on IVLE, none was posted yet and I dont think they will post since so many people skipped.

~Zhongye

Econ lecture on 20/5 4.30pm~5.30pm (Macroeconomics)

2009-05-20T19:32:00.002+08:00

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.

Week 9

2009-05-16T19:10:00.001+08:00

Message from Raj

Hi econs reps!!!!

Raj here!! better remember hor.. anyways.. pls remind e class dat nxt week we will b going thru BoP test, and prob set 5!!!

Cya

Econs Homework : Case Study 5

2009-05-08T21:59:00.003+08:00

There will be another set of econs case study to do. It consist of 7 econs MCQ if im not wrong.
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Quoted from email:
Deadline: 13 May 2009 (Wednesday) 12 noon. Please the completed answers into my pigeon hole at your class levels. Attach a list of people who have not handed in.

Remember to study for international trade.
CE too!

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There is econs test on Wednesday if im not wrong on pg 1~16 of the international trade topic.

Econs Solution

2009-04-29T07:00:00.001+08:00

Standards of living has improved

-General trend of increasing growth rates in real GDP and decreasing unemployment rates
-Growth in GDP shows that there is a growth in real output. Higher level of satisfaction from greater quantity of goods and services. Increases material well being, standard of living increases
-Reducing unemployment rates would imply increasing employment, cp. Household’s income will increase, increasing demand for firms’ goods and services. AD increases, output increases, quantity of goods and services consumed increases. Higher material well being. Increase in SOL.
-High employment will also increase workers’ morale which may in turn increase labour productivity. Higher labour productivity may lead to higher wages as demand for labour would have increased. Higher disposable income amongst households, and therefore higher purchasing power on goods and services. Hence, standards of living would have increased. :)

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I have forwarded to Yi Hui and Edmund who will forward to the rest of you.

~Zhongye

UK US Qn 5 Ans

2009-04-27T18:05:00.002+08:00

Question 5
• Expansionary Monetary Policy – Interest rate reduction (Extract 2)
o By theory, the fall in interest rate should work in the US – US has a large multiplier. Furthermore, it is a large economy, hence it is a price-setter in the funds market. Thus, when it reduces interest rate, other countries will follow suit. -> “UK also reduces its interest rates after the US did so.”
o However it may not work, does not solves sectoral unemployment. Monetary policy is generic, does not target at any particular sector.
o Interest inelasticity due to poor business outlook, hence fall in interest rates does not lead to a rise in investment expenditure. MEI curve will be relatively steep.
• US government and Central Bank are not actively combating unemployment – there is an observable improvement in labour productivity (see Question 3)
o The US government wants to continue to encourage technological advancement so that it leads to future potential growth.
o Capital accumulation may continue.
o Labour may undergo skills retraining – quality of labour improves in the long-term.
o Outsourcing – Reduction in cost of production for US. If foreign countries have comparative advantage, they can produce goods at lower opportunity cost, hence reducing the cost of production for the US.

• Evaluation for US’s policy of not doing anything:
o Does not solve unN in the short-term, hence the standard of living of households will continue to be eroded. AD will continue to be suppressed at a low level, and this will lead to lower economic growth. (firms are unwilling to invest due to poor business outlook, hence affecting potential growth.)
o In long-term, if unN had already been persistent for a long period of time, employment may not increase. (eg. A retrenched worker’s skills deteriorates after being unemployed for a period of time)
o Affects children’s education – hence affecting future labour productivity.

• Hence, policy of ‘doing nothing’ is being hindered by the high level of uncertainty involved. -> supply-side policy

• The government may adopt expansionary fiscal policy instead. Government may target spending on R&D in sun-set industries -> increase employment.
 However US may not be advised to carry out expansionary fiscal policy – already in a budget deficit.
 US is the largest debtor in the world.

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sidenote: I will forward to yi hui and edmund. Those who want a hard copy of this plus the marking scheme come and find me.

~zhongye

Problem Set 4

2009-04-27T18:04:00.000+08:00

Dear all,

Problem Set no. 4 for term 2 Due: 4 May (Monday) 12 noon - reps to ensure all is in before slotting into pigeon hole

Case Study Q1 (WB pp 45 - 6): all

Case Study Q2 (WB pp 46 - 8): all

Case Study Q3 (WB pp 48 - 9): all

Essay: Discuss if a devaluation of currencies is the most beneficial policy to tackle the problem of falling exports for countries such as Singapore and China. [15 marks]

LORMS on US UK qn5 policies

2009-04-27T18:01:00.002+08:00

Levels Marking Scheme for Case Study Question on whether US adopts the best policies in tackling unemployment

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L3 Policies that are adopted by US as shown in the extract are explained and evaluated clearly. Fiscal policy is explored as an alternative policy that is not mentioned in the extract.

An answer that comes to a synthesis or stand on whether the best policy is adopted will get a maximum of 8 marks (provided all the above is fulfilled.)

There is a very strong linkage between the policies and the tackling of unemployment rates in the US.

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7 – 8
L2

Answer identifies expansionary monetary policy, explains it and evaluates the effectiveness of such a policy. Answer may also suggest and evaluate the use of fiscal policy to overcome unemployment.

Answer fails to identify Alan Greenspan’s stand on the supply-side measures.

Or answer explains the policies on tackling unemployment but evaluation and linkage to the US context is weak.

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4 - 6
L1

Lop-sided answer that only explains how the policy works.

Or discuss of policies only in theory, without clear attempts to link to the context of the case.

There is little or no attempt to draw resources from the case. 1 - 3

2009-04-26T18:16:00.000+08:00

hello all!
i think we should collect separate funds for chem and phy since there are h1 and h2 right
yeap then it will be fair =]

hope that this idea can be carried out
toodles

Econs: Message by Mr Lin Pei

2009-04-20T17:40:00.000+08:00

Dear all,

I will be conducting the

CE for BoP on Saturday morning at 0800h. The reason for this is to allow a focused effort to revise for BoP.

Please consolidate a name list of those who are down for

CCA duties and can't come. State their CCA & start time.

Please give me the list by

tmr after lecture.

LP

Econs Homework

2009-04-16T22:46:00.002+08:00

CASE STUDY Qn 3 (pg 38) parts and learning points:
(a) - data response skills: cross country comparisons, reading bar charts, interpreting relative data
(b) - using economic analysis to explain conflicting viewpoints and outcomes
(c)(i) - causes of unemployment, indicators of causes
you may choose not to do part (ii)

ESSAY Qn 4a (pg 39)
Main learning point: responding to the stimulus (signpost)

N.B.: All to write out in FULL

Due date: 22 April 2009 (Weds) 12 noon.

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On the side note, Mr Lin have sent me the incomplete supply-side notes that he let us preview. I will send to Yi Hui and Edmund to forward it to the rest. Those who want a hard copy of it inform me.

~Zhongye

2009-04-13T18:46:00.002+08:00

must watch!!! =D

Econs homework - 07/04/09

2009-04-07T19:19:00.003+08:00

Unemployment in the UK and US
Extract 1: Falling unemployment (the Guardian, 2000)
The claimant count in the UK has fallen steadily – it is now 3.6 percent. An alternativemeasure, the labour force survey, however indicated that unemployment rate is 5.3 percent.

But is some parts of the country are enjoying full employment, there are pockets left
untouched by growth. Cities that were thriving on heavy industries such as Liverpool and Glasgow, inner city districts such as Tower Hamlets, parts of the Scottish highlands as well as resorts such as Brighton are pockets of employment black spots.

Age and racial discrimination contribute to the difficulty for some to find jobs. Whiteapplicants are three times more likely to get an interview than people from Asian backgrounds with equivalent qualifications and five times more likely than black people.

Extract 2: Boom, boom…bust: a tale of two economies (the Economist, 2002)
In 2001, for the first time in eight years, the annual change in real GDP of the US
economy was negative. As the domestic economy experienced a downturn, the number of
people out of work has increased. The Federal Reserve reacted to the decline in economic activity by cutting its interest rate to just 2 percent in October 2001, the lowest in forty years. The Monetary Policy Committee of the Bank of England responded by reducing its interest rate to 4 percent although the UK economy was relatively strong compared to that of the US.

Extract 3: No change in US rates (Today, 2004)
Policy-makers sounded more cautious about the prospects for a strong job growth – so far a missing ingredient in the recovery from the recession.

Federal Reserve chairman Alan Greenspan said last week that job picture should brighten “before long as output continues to expand”. One factor presently holding hiring down is a huge growth in labour productivity, but those gains will wane indefinitely and force companies to take on more employees.

Extract 4: Protecting jobs will backfire (Today, 2004)
Alan Greenspan warned that “erecting walls” in a bid to curb job losses would backfire on the US.

Although he firmly believed that employment would begin to increase more quickly
before long as output continued to expand and that new jobs would replace old jobs, he also cautioned that the job turnover process would never be without pain.

He acknowledged the rising concerns “about the possibility that an increasing number of our better-paying white-collar jobs will be lost to outsourcing”. He said, “We can erect walls to foreign trade and even discourage job-displacing innovation. The pace of competition would surely slow and tensions might appear to ease. But only for a short while.” Efforts to protect US jobs through legislation could end up backfiring, he added.

Questions
1. With reference to data, describe how macroeconomic performance of the US and
UK had changed since mid 1990s to the early 2004. [4 marks]

2. Explain what is meant by labour productivity [1 mark]

3. With reference to extract 3, analyse the short and long term impacts of labour
productivity improvement on unemployment in the US [3 marks]

4. Analyse the causes of unemployment in the US and UK between 1996 and 2004
[6 marks]

5. Based on the data, do you agree the US is adopting the best policies to combat
unemployment? [8 marks]

6. How far does table 1 show that standards of living has improved in the US and
UK in the later half of the 1990s? [8 marks]

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Note: I will email the file to edmund and yi hui to send around.

Econs Homework

2009-04-02T21:52:00.002+08:00

"2008 as a whole, the economy is estimated to have grown by 1.2 percent, compared with 7.7 per cent in 2007 "

a) What factors may have caused the slower economic growth rate in 2008? (12)

b) What are the relative merits and demerits of the policies that may be adopted by Signapore's government to re-stimulate the economic growth rate? {13}

2009-03-30T19:13:00.001+08:00

since u ppl wanted a change of songs
but never say what u all want...
there you go!
ahaha

2009-03-29T23:45:00.000+08:00

2009-03-29T23:40:00.000+08:00

2009-03-29T23:34:00.001+08:00

2009-03-29T19:30:00.005+08:00

Hello kope your photos from here!

08S105 is damn dope okay. Glamourous like nobody's business.

2009-03-23T01:07:00.001+08:00

Good luck guys
Just 4 days it'll be over fast.
Die a painless death.

Cheers.

Dedicated song for upcoming MBT

2009-03-13T11:20:00.002+08:00

Good luck to everyone taking it.
The song can be found here : http://www.youtube.com/watch?v=NG2zyeVRcbs (Miley Cyrus - The Climb)

Could not post the video here as there are lots of restrictions on this blog. Also, regarding the econs scheme that I asked yi hui and edmund to email you all, if you dont mind, please stay back on mon after gp while I photocopy for you all the answer scheme.

~Zhongye.

Tutorial case study questions, answers and structure to CE3‏ : Term1Week10Tut2 Questions

2009-03-13T10:41:00.000+08:00

Term 1 Week 10 Tutorial 2
- Data response
- Exchange rates
- AD-AS, economic growth, inflation

1.Refer to figure 1. Describe the change in investment cost amongst Asian countries in terms of US dollars. (2 marks)

2.Using examples, suggest 2 reasons for the observation in question 1. (4 marks)

3.Which country is most likely to have pegged its currency to that of the US dollars? (2 marks)

4.Which country’s currency depreciated the most against the US dollars? (3 marks)

5.Suggest and explain a reason for the depreciation amongst Asian currencies against the US dollar (3 marks)

6.Evaluate the sustainability of the rapid economic growth rate in Asian economies in year after the 1997 – 98 crisis. (8 marks)

Total of 22 marks

Tutorial case study questions, answers and structure to CE3‏ : Term1Week10Tut2_answers

2009-03-13T10:28:00.005+08:00

Term1Week10Tut2_answers

1.Refer to figure 1. Describe the change in investment cost amongst Asian countries in terms of US dollars. (2 marks)

Across Asia, the cost of investment fell [1 mark]
The degrees of reductions vary, for example, cost of investment in Vietnam increased [1 mark]

2.Using examples, suggest 2 reasons for the observation in question 1. (4 marks)

Technology improved with the ICT revolution that took place in the middle of 1990s. This reduced the cost of production, thereby reducing the price of machineries, especially the ICT equipments [2 marks; may use demand supply diagram to illustrate fall in price of ICT equipment, but not necessary]

There may be a fall in demand for investment goods during the 97 – 98 crisis. [1 mark]
Stocks/ inventories of investment goods may have piled up leading to a reduction in price and fall in output. [1 mark]

3.Which country is most likely to have pegged its currency to that of the US dollars? (2 marks)

China. [1 mark]
The fall in cost of investment in terms of the local currency in China is equal to the fall in terms of US dollars. [1 mark]

4.Which country’s currency depreciated the most against the US dollars? (3 marks)
Indonesia [1 mark]
While the cost of investment in Indonesia counted in terms of US dollars had fallen, the same cost increased in terms of Rupiah (Indonesia’s currency). [1 mark]
This suggests that the Rupiah had weakened in its value against the US currency. [1 mark]

5.Suggest and explain a reason for the depreciation amongst Asian currencies against the US dollar (3 marks)

Upon the onset of the Asian financial crisis, there was a massive capital outflow. This can be inferred from the statement that there was a “return” of overseas private capital to the region. There must have been a “departure” of such capital before there is a “return”. [2 or 1 marks]

Such a flight of capital from Asian economies would have reduced the demand for the economies’ currencies. The value of these currencies would hence fall. [1 or 2 marks]

{Candidate may choose to illustrate change in exchange rates via a diagram. }

6.Evaluate the sustainability of the rapid economic growth rate in Asian economies in year after the 1997 – 98 crisis. (8 marks)

Economic growth rates may be defined by actual and potential growth. The former is the rate of change in the volume of output produced within the country in a year. The later shows the increase in the economy’s capacity to produce. Sustainability of economic growth refers to the ability of the growth to be maintained and in the absence of high inflation rates.

Asian economies experienced high rates of actual economic growth after the financial crisis. First, exports increased, led by the electrical and electronic exports to the US. This increment in exports may be due to the depreciation of local currencies against the US and also a strong economic growth rate in the US itself. There is also increase in trade amongst the Asian economies as suggested by the identification of “active intra-regional trade” in the excerpt.

Asian economies also received inflows of international private capital. Short term capital inflow increases the firms’ abilities to increase their investment expenditures and to employ more workers. Long term capital inflow, probably in the form of foreign direct investments increased investments and employment directly, increasing the aggregate demand (AD) in the economy.

Increase in investments also implied that in the long run, aggregate supply (AS) may have increased (fig. 1), increasing potential growth. Output may be increased (Y0 to Y1
) with the lowering of the GPL (P0 to P1 ). Hence, the growth in Asia may be sustained.

The concern however is that AS may not have increased after all. The financial crisis may have caused governments to cut back on their investment spendings to reduce budget defict. This was exemplified by Taiwan (excerpt 2). As argued above, there might have been a capital flight from the economies, reducing investments in the earlier period. Fall in both public and private capitals would shift AS leftwards. With an increase in AD as identified above (increment in exports and consumption) in Asian economies, there may be a problem of inflation (fig. 2)

Depreciation of Asian currencies against the US dollars may also have increased the price of imports in Asian economies. Increment in these prices may have increased the cost of production if the imports are factors of production, and increased the consumer price index if the imports are finished consumer goods. Hence, depreciation of Asian currencies is a double edge sword. On one hand it increases the net exports of the Asian economies, on the other, it may bring about higher rates of inflation.

Reliance on the US economy may also be another problem. AD is sustained by exports to foreign regions such as the US. This makes Asian economies susceptible to adverse economic performances in these foreign regions.

In conclusion, there is much uncertainty revolving the rapid economic growth rates after the financial crisis in Asian economies, making such growth rates unsustainable.

Tutorial case study questions, answers and structure to CE3‏ : Term1Week10Tut1_questions

2009-03-13T10:26:00.001+08:00

Workbook pg 1 Qn. 4

1.How did the Colombian economy in the second half of 1990s compare with that in the first part? (2 marks)

2.A “sharp decline in economic growth has caused a rise in the government’s budget deficit.” Explain why this may be so. (2 marks)

3.What may be the impacts of the change in government investment on the Colombian economy? (4 marks)

4.Explain how a devaluation of the peso may cause a change in the macroeconomic performance of the Colombian economy. (4 marks).

5.Analyze whether the Colombian government can pursue an expansionary monetary policy using interest rates if it wishes to maintain control on the peso. (6 marks).

Econs Tutorial case study questions, answers and structure to CE3‏ : Term 1 Week 10 Tut 1

2009-03-13T10:12:00.005+08:00

Term 1 Week 10 Tut 1

1.How did the Colombian economy in the second half of 1990s compare with that in the first part? (2 marks)

The performance worsened [1 mark]
Economic growth rates fell from 4.7 percent on the average a year in the earlier half of 1990s to that of 1.8 percent in the later half. Unemploymnt was 19.5 percent in the later half compared to the earlier. [1 mark for elaboration with example from date]

2.A “sharp decline in economic growth has caused a rise in the government’s budget deficit.” Explain why this may be so. (2 marks)

A fall in economic growth rates imply that national income falls [1 mark]. The government’s tax revenue from direct taxes would have fallen. Assuming government expenditure remains unchanged, budget deficit worsens. [1 mark]

3.What may be the impacts of the change in government investment on the Colombian economy? (4 marks)

Government investment is a form of injection into the circular flow of income. It is also a component of the aggregated demand (AD). In the short run, a fall in government investments would mean a fall in injections and AD. This kicks off a multiplier process that brings about a fall in the real output of the economy (fig. 1), resulting in a fall in national income. [2 marks]

In the long run, the aggregate supply (AS) curve would shift left due to a fall in capital formation as government reduces its expenditure on capital goods. The production capacity of the economy would fall, ceteris paribus. The result of the leftward shift in AS is a fall in real output. Negative change in real output in the long and short runs reinforce each other to result in a large fall in real output. [2 marks]

4.Explain how a devaluation of the peso may cause a change in the macroeconomic performance of the Colombian economy. (4 marks).

The devaluation of a currency is a reduction of the currency’s value by the discretion of the government or central bank. The devaluation of the peso suggests that Colombia adopts a fixed exchange rate regime. [1 mark]

As the peso devalues, price of Colombia’s exports in terms of foreign currency falls. The quantity demanded of Colombian exports increases in the international markets. Conversely, the price of foreign goods in Colombian markets is lower. Quantity demanded of imported goods by Colombians fall. [1 mark]

As Colombia is a relatively small market on the international scale, demands for exports and imports tend to be price elastic. This leads to the fulfillment of the Marshall-Lerner condition such that with devaluation of the currency, net exports increase. [1 mark]

This improves the AD of the Colombian economy. As seen from fig. 2, the real output increases. [1 mark]

5.Analyze whether the Colombian government can pursue an expansionary monetary policy using interest rates if it wishes to maintain control on the peso. (6 marks).

An expansionary monetary policy aims to promote increment in real output via an increase in money supply or a reduction of interest rates. It is a demand-side policy that causes AD to shift rightwards.

The decrease in interest rates would cause an outflow of short term capital (hot money) from Colombia. In figure 3, we see that such a capital outflow increases the supply of the peso in the currency market, exerting a downward pressure on the exchange rate of peso. To maintain the exchange rate of peso at ef, the central bank of Colombia has to sell foreign exchange and buy peso, such that the demand for peso increases from D0 to D1.

Selling foreign exchange continually to protect the value of the currency is unsustainable as the central bank may soon find itself drained of foreign reserves in its effort to sustain the fixed exchange rate. It would therefore raise the interest rate back to the original level in order to restore the market equilibrium exchange rate of the peso. Raising the interest rates back can be seen as a contractionary monetary policy. This move neutralizes the initial expansionary policy.

[It is also argued that interest rates may rise back automatically. As hot money flows out of the economy, the availability of loanable funds for firms and households is being reduced. Interest rates will hence rise, offsetting the initial fall dictated by the central bank. Hence the initial expansionary policy is neutralized]

It can thus be seen that to maintain a fixed exchange rate, a government actually forsakes the control over interest rate as a tool for monetary policies.
However, the above analysis is based on the assumption that Colombia has an open capital and financial account. However, this may not necessarily be the case. If Colombia has a closed capital account (imposition of capital control[1]), the reduction of interest rate

[1] Capital control refers to the restriction of the amount of a country’s currency that can be sold at any one time. For example in the aftermath of the 1997 financial crisis, Malaysia imposed capital control to restrict the outflow of short term capital from Malaysia. Despite heavy criticisms from organizations such as International Monetary Fund, it has been argued (by renowned Western academics inclusive) that Malaysia became one of the faster countries to recover from the crisis due to the imposition of capital control.

Econs homework for next week

2009-03-07T09:48:00.002+08:00

There are 3 tutorials for next week.

Homework: 1)Rewrite/write the essay on whether the govt should keep inflation at 0%.
2)Find out how the exchange rate policy works.
3)Study econs for MBT.

1st tutorial :
Going through the essay and the exchange rate policy

2nd and 3rd tutorials:
Going to do case study for both. Bring all your lecture notes for lesson.

Econs homework

2009-02-19T19:14:00.002+08:00

For those interested,
Due next week: WB pg 17: Essay 2(a) only.

Due next thursday:

Essay: "If inflation is so bad, governments should keep inflation at zero." Discuss. (25m)

Sidenote: If im not wrong, Mr lin say can write in point form but must be detailed. Alternatively, you can write in full. It is to be presented in class and Mr Lin will only be filling up details.

Econs homework FAQ

2009-02-15T23:28:00.003+08:00

When is the assignment due?

For tommorow, 16 feb mon, Mr lin is going through the class test. So if im not wrong he will go through it on the next econs tutorial which is on the wed.

"Inflation gap is on the next topic"

Please dont sleep during lecture.

-Sidenote: Please make an effort to do the extra questions too. So yeah, carry on mugging for your chem test tmr. Im curious to see whether we can hit mr ong's challenge of at least 12/14 people getting e.

2009-02-14T00:00:00.000+08:00

Happy Valentine's day!

Qn 1a answer structure

2009-02-09T20:52:00.006+08:00

This is for those who had missed the econs tutorials for orientation. I am only typing this question out as it is the only question that I found that contains the K multiplier which is tested tommorow. I will photocopy it for anyone who wants it together. Also, I cant type out the diagram online so I will just use the words. I will type out what I have copied down in class.

Start:Intro

-Investment is a form of injection

-Addition to the circular flow of income

-Definition: Total planned expenditure on goods and services.

-Definition of investments: Process of creating capital ( K ) goods.

-Planned expenditure = income.

-J = W

-J = injection = investments + government spending + exports

-W = Savings + taxes + imports

-J increase. J > W

-Expenditure > Income

-Income of firm producing capital goods Increase

-This will spark off another round of consumption

-At the same time, part of the addition Income is withdrawn as savings, taxes and imports.

-Process continues until J = W

-The new equilibrium is at C ( fig 1 ) where the national Income is at Y1 income level.

-Hence, increase in expenditure has incrased national income.

-K = multiplier

-Change in Y= K x Change in I -----------(1) (I suppose Y = national Income while I = investment)

-The value of K is given by eqn 2.

-K= 1/MPW ---------------(2)

-Eqn 2 shows that the lower the marginal propensity to withdraw (MPW), the larger the multiplier. Hence, the larger will be the impact on national I by a given Change in Y.

-However, the AE model is based on the assumption of the excess capacity. This may not be the case in the economy. If I increase but the economy is at full employment already, inflation may result. Thus in this case, the increase in I will not lead to the increase in national Income.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Sidenote:

-Norminal Income --> How much % Income increase

-Real I --> How much % Income increase and how much % increase in price level. ( Relative. If im not wrong, when the income increase, the real income may not increase due to inflation. )

-Mutiplier effect stops when Change in I = Change in W.

Econs - qn 1d.

2009-02-09T20:51:00.000+08:00

Zhongye, please forward to class.

Dear 105, I've looked through your essays.

Two problems:
1. Many of you missed the focus of the question by over elaborating on the multiplier. THis question is about macroeconomic goals.
2. Discussion is largely missed. There is rarely a for or against in each of ur discussion on each indicator. Work on this. But I think writing quality has overall improved. Keep it up!

Regards,Mr Lin

Econs homework to be done - Zhongye

2009-02-09T20:46:00.002+08:00

Tutorial Problem Set 2
Question 1 (WB pg 8):
Distinguish between inflationary and deflationary gaps. (10 marks)

Question 2: This problem set aims to consolidate the lessons learnt in economics since
the beginning of the term. To successfully complete the problem set, students will have to
utilize the full range of knowledge and skills acquired. Knowledge include the
macroeconomic models and indicators; whereas skills involve answer planning and stepby-
step explanation of macroeconomic processes as discussed in class.

Refer to the case study on the Colombian economy (WB pg 1).
a) How did the performance of the Colombian economy in the second half of the
1990s compare with that in the first half? (2 marks)

b) “Sharp decline in economic growth has caused a rise in the governments’ budget
deficit”. Explain why this may be so. (3 marks)

c) Using AD – AS model, analyse the possible effects on economic growth rates and
inflation due to the change in unemployment between 1994 and 1999. (6 marks)

d) Using the AD – AS model, analyse the possible effects on output and price levels
due to a change in government expenditure on investment projects in Columbia.
(6 marks)

e) How far would you recommend the increase of government expenditure as a
measure to improve Columbia’s economic performance in the late 1990s? (8
marks)

Think1:
(i) How would a devaluation of the peso affect the balance of trade,
unemployment rate and inflation in Columbia? (6 marks)

(ii) Imagine you are an economic advisor to the Columbian government. Discuss
the policy(s) that the government may exercise to improve Columbia’s
economic performance. (Hint: How may we make use of the multiplier?) (10
marks)

1 These are higher-order level thinking questions. I will not go through in class, but will be extremely happy to discuss them if there is time or receive answer schemes through emails. It will be wrong however to dismiss these questions as being irrelevant to the syllabus – they are not! On the contrary, such questions have become frequent guests of A-levels economics exams.

2009-01-23T18:50:00.000+08:00

pictures of CNY celebrations up here!

me lazy to upload to blogger. haha.

2008-11-12T20:34:00.002+08:00

erm...i thought the class chalet will be held in jan, a few days before school reopen.

2008-11-07T20:47:00.000+08:00

doing a poll here. who wants a class chalet?

2008-10-29T19:51:00.000+08:00

good luck to those taking As chinese tmr

birthdays!

2008-10-15T19:36:00.003+08:00

okay photos here.

monday was terence's birthday, so he got a cake!

i am lazy to think of what to type so shall just end here for more photos please click HERE!

lastly, a very happy birthday to edmund chong too today!

2008-09-22T17:53:00.001+08:00

i dont think anyone will see this... it's a tad late anw but still

good luck for promos!

hmk errata

2008-09-12T18:06:00.002+08:00

hey guys just to let u know the chemistry revision exercise have problem

Qn 1 d) .... is not likely to be feasible for the reaction...

Qn 2 d) ....tetrahedral product that ......

Cancel the product in the later part of the question...
thks...
the words in pink are the missing words thks

IMPORTANT

2008-09-09T23:10:00.001+08:00

EOM FINAL Submission 12 September!

Cheer up CG and Vice CG rep!

2008-09-06T14:54:00.003+08:00

Hey all, after all that has happened so far in the class, I really really wish that Yi hui and Terence will stay in. That much i believe in. There are always the people that always appreciate ur hard work and try our best to help you both in any way possible. Its been hard on the both of you, with all the stress of deadlines etc etc but as a member of the class, i do hope that both of you will stay. You both have contributed much to the class and i really sppreciate all that you have done, as i believe many of our classmates believe too. So cheer up you two! There is still many chances to enjoy together. So terence and yihui, hang in there!

shawn

08s105

2008-09-03T14:32:00.002+08:00

Hey there...
Gd luck for the promos...
btw terrence... hang in there for a while...
i believe that all of us want to move up the ladder to the next level...
i am sure that everybody wants to do it....

-hyena-

2008-08-31T22:29:00.003+08:00

Sorry for uploading the pictures so late folks!
Hahaha so random
Scandal sandal woots woots

Scandal again!
Eh Bryan you think you sexy ah

Laoshi so shuai HAHAHAH

Don't be so upset Terrence. At least some of us appreciate your effort. I know it's been really tough but just hang in there alright! :)

-Jade

pictures on teacher's day

2008-08-31T22:17:00.000+08:00

2008-08-31T22:12:00.000+08:00

i dun know what to say-yi hui

2008-08-29T18:31:00.003+08:00

I am not sure about saying these things on the blog, but these are my true feelings. After reading terrence's blog, i feel the same way as him. I feel that the class in not bonded at all. I guess perhaps it is right that some people say that our class "CMI". But all along i cling on to the faint hope that "NO", we are going to prove those people wrong, we are going to work hard and play hard as a class!

At the beginning of the year, I have taken up the role as vice CG rep as i hope to give everyone of you a memorable school life in MJ. Now, I feel guilty that i am not able to foster a strong bonding in our class. Now, I feel responsible for not being able to infuse the enthusiastic spirit into our class. Now, I feel so helpless... I am not sure if i should be saying these cos I am a person who does not give up that easily. I belive that there is nothing beyond the limits of any one of us. But after so many times of trying(class bondings, the national outing trip, the teachers' day party), every one still seemed so foreign and indifferent to another.

A class will remain bonded not just from the contribution of some individuals, everyone should volunteer to make any class event a successful one, just as it makes two hands to clap.

Life is just too short to waste, we only have two years or maybe less than a year for us to be together as a class. Why can't we just open our hearts to one another and have enjoy our school life in MJC?

Finally, what i want to say is that work hard for your promos. Yep, that's it.

-yihui

2008-08-28T22:28:00.002+08:00

Teacher's Day shall be my final assignment as the CG Rep of 08S105. After that I'm your chairperson no more. Honestly saying I'm really tired of being the chairperson. Do you know much I have to do and how much effort I have to put in order to complete a simple task? I guess not. Look at the class. Can you even call it a class? CG Rep?-rep of what class? Have you all ever thought of helping to make life simpler for me and Yi Hui by simply coorperating with us. Look at the class activities that were given to us...have we ever done them as a class? I think you know the answer yourself. Class activities are meant to be done as a class but why issit i get the feeling i'm always doing them myself or perhaps another individual has to help me finish the job. What about the rest of you? 'Ah who cares...its such a waste of time. Let the others do. I have more important things to do' thats your mentality right? Then why am I doing all of it? Issit because i like doing?-bullshit! I hate to do them but i still do because it is a responsibility. I can choose to heck care also but i dont because i dont want people to think that our class has a 'heck care attitude'( though that's true). I do it for the class- but i guess up till now there's no class. I have been really patient, hoping that the class will work together so that i can also be proud to call myself the CG Rep of 08S105. Sadly thats impossible because right at the start there was never a class. I have been doing everything( with the occational help of some people) and i guess people take all that forgranted because i have always been there. And so now i have decided to take a step back and retire form my place so that you all will feel what things will be like when i'm not there. I wont describe how things will be like even though i can imagine. I want to make sure all of you will feel it- the feeling of being lost. I give up on the class. I give up on all of you. I'm really tired...very tired. I have other roles to play also( PW Group Leader). It's hard for me to perform double roles but yet i'm trying so hard. I'm not superman-not even he can't do things that i have done. I have lead this class long enough. When i look back, i'm amazed that i can actually endure 2 months as the chairperson. It may seem like i'm running away and i'm shirking responsibilities. I don't really care because if you think you can do a better job than me then you can go ahead and prove that i'm running by taking my place. Even if you all realise and decide to change, i have already made my decision that i will retire. I'm tired of cracking silly jokes so that teachers don't get that angry and the class can become more lively. I'm tired of smiling so that those around me will be happy. My life is like a flying fish. I try to fly to reach the sky but it is impossible. When i'm tired of struggling, i will go back into the deep waters that are so silent, so cold. I have always been thinking alone. Have you ever thought thst some of my smiles were simply fake? Guess not. I've been doing that a lot that they seem so genuine. Do you all know i still have CG stall to settle?- gave up on that one already.

To those who have always helped me in my tasks, i thank you for your help. I'm sorry but i guess you all will have to help yourselves now if you want to do any class activities. I wont expect anything much out of the teacher's day celebration but its my final task.

Work hard for your studies!- Terence

Reminder

2008-08-25T21:09:00.007+08:00

Make up econs lesson on Wednesday 2.30pm at LT5

Chem alkanes tut on Wednesday
Physics oscillations assignment due on Thursday

Take note!!! EOM final submission 12/9/2008

edit: ok BD. my bad!!

2008-08-19T19:30:00.002+08:00

reminder: there's career seminar talk tmr from 2.35pm to 3.25pm.
and ionic equilibrium test tmr.

2008-08-16T23:30:00.002+08:00

added some music.

ok. if you guys & girls got some time, go read http://anntonii.blogspot.com.
he writes stories, but not a pro writer. but then still nice.

080808 photos!

2008-08-14T19:56:00.005+08:00

here are some photos from 080808!

Lily Li Hui Min with her singtel ad.

jade lee with her hilarous eh expression

no comments HAHAHA.

ASH CHAN gotta catch em all!
i only posted this up cause he told me to delete it HAHA

YUWEN birthday boy with eh. covered cake :D

who took this photo HAHAHA

six babes woots

okay -.- & lastly,
..
...
....

more photos here :D

2008-08-13T16:32:00.003+08:00

Good luck for Chem spa tmr! and maths vectors4 test.

hippee

2008-08-11T21:44:00.001+08:00

Hey guys
this week is goign to be a busy week jiayous for 08s105!!]
Dont give up!!!!!!!!!!

2008-08-08T19:41:00.002+08:00

Happy Birthday Yu Wen!!

2008-08-03T23:19:00.002+08:00

hello friends, just to remind you that the problem based learning will be due on 12 aug during the physics tutorial. Do it early and have fun.
-yihui

Heh Terence HERE!

2008-08-03T20:09:00.003+08:00

lol...i'm just trying out. i wonder how it will look like when i click the button 'publish post'. Anyway what i wanna say is can you all PLEASE check your bags if you all took the chinese piece of paper where you all had to check your chinese names and sign by mistake. There will be a lot of problems if it can't be found. Please check no matter how confident you are that it is not with you. Most of the time it ends up to be YOU so check! Urm...what else shld i say? Oh if U haven't started studying-U shld really start. Time flies so if U wanna catch-up...U have to grab hold of it tightly. Oh forgot to put my name...I'm TERENCE

2008-08-03T00:03:00.010+08:00

due to popular demand... the homework for this weekend

Phys kinematics worksheet + gravitation assignment + oscillation tut (all on Tuesday)
Chem ionic equilibrium tut (Tuesday)+The extra ws do what u can asap
Maths vectors 4 tut(Tuesday)
Econs article(Friday)
PW EOM draft2(Sunday night) + respective groups' WR (on thursday=] )

E learning:
Chem, Maths, Econs, GP, Chinese.
Refer to lesson plans.

Reminder: Tuesday runs on Monday's timetable. Also, from next week onwards, normal PE resumes( but next week only friday got PE)

feel free to add on.

2008-08-02T11:01:00.000+08:00

Hello I guess everyone wants this picture. And hurray for class blog!

The Beginning...

2008-08-01T21:52:00.000+08:00

Hey people!
This is a new start...
Lets go together...
Be promoted together...
study together....
remain friends forever...
08s105 forever...
hyena