Sample Economics Essay Questions – Domestic Economy

JC Economics Domestic Economy Essay Questions

Are you looking for question samples to prepare for your upcoming Prelims or eventual GCE A-Level Econs exams for H2 students, focusing on essays on Domestic Economy. Are you struggling for your H2 Econs (9757 Syllabus) Paper 2? 


In order to do well for this topical essay, you need to sufficient content knowledge of macroeconomic indicators and macro Econs performance, plus standard of living (SOL). Next, you must be well-versed with the macro aims of Economics growth, Unemployment and Inflation. Finally, you must be superb with the demand side policies (DSP) and supply side policies (SSP) – this is the key to scoring for H2 Economics. Note that the topic appears mostly in Section B of question Paper 2.


Here is sample listing of Domestic Economy essay question list:

1a) Analyse the impact of a worldwide recession on Singapore economy. [10]
1(b) Discuss whether monetary policy centered on exchange rate is the most appropriate policy to achieve high and sustainable economic growth in Singapore. [15]


2(a) Explain the necessary economic indicators an economist would require to measure the performance of an economy. [10]
2(b) Discuss whether a widespread shortage of labour might be a major cause of inflation. [15]


3(a) Using the production possibility curve, explain how a change in government spending may affect an economy.
3(b) Assess whether GDP data is the best measure to compare standard of living between Singapore and other economies.
(standard of living or SOL)


4(a) Explain whether domestic or external factors are more significant in influencing the rate of inflation in Singapore.
4(b) Discuss whether a low rate of inflation should be the main priority of a government.


Q5. To help Singapore achieve sustainable economic growth, the government has been reducing income taxes and corporate taxes over the years. It also increased its reliance on indirect taxes-raising the rate of Goods and Services Tax (GST) from 5% to 7% in 2007.

Discuss whether the changing tax structure will improve current and future living standards in Singapore. [25]
(standard of living or SOL)


Q6. Many advanced countries like USA and UK have been adversely affected by the recent financial crisis and increasing competition from emerging economies such as China and India.

(a)  Explain the causes of unemployment in these advanced countries in recent years.
(b) Discuss whether a change in interest rates is the best policy to reduce unemployment in these countries.


Q7. Instead of tax breaks, the Japanese will be presented with shopping coupons. These coupons will not be redeemable for cash and they will have an expiry date, thus catapulting families back into the stores and setting the tills ringing.
(Source;, )

(a) Explain the possible causes of an increase in autonomous consumption [10]
(b) Assess the possible impact of an increase in autonomous consumption on the equilibrium level of national output and the general price level.
(economic growth, inflation)


Q8. Discuss how far a government’s macroeconomic policy decisions are affected by the country’s national debt. (25)
(macroeconomic policies)


Q9. Singaporean economy has been growing rapidly and as a result the country has now one the highest GDP per capita in the world.

(a) Explain how economic growth can be sustained.
(b) To what extent should economic growth be the most important aim for Singapore?
(economic growth)


Q10. Explain how income inequality could result from the pursuit of economic growth in Singapore and discuss whether the Singapore government should make adjustments to current policies taken to achieve economic growth? [25]
(economic growth)


Q11a) Explain the factors that could cause a change in the size of the national income multiplier of a country. [10]
Q11(b) To what extent do you agree with the view that the effectiveness of a fiscal policy is most dependent on the size of multiplier of the country? [15]
(fiscal policy)


Q12. “In 2011, Singapore’s labour productivity growth rate fell to 1%. The government is investing heavily in restructuring of the economy towards skills, innovation and productivity-driven growth. The take-up of the various productivity schemes has been encouraging so far, but we can do better.”
Source: Ministry of Finance Singapore, 2012

(a) Explain how the challenges in the labour market would affect Singapore’s sustained growth. [10]
(b) Discuss the policies that the Singapore government can implement to tackle these challenges. [15]
(macroeconomic policies)

Q13. Deputy Prime Minister said that Singapore’s economic growth will be weak in the short term mainly because of the gloomy world economy. Meanwhile, companies have been hard hit by the recent hikes in foreign worker levies and tightened rules for
Employment Passes for foreign labour.
(Adapted from the Straits Times, 11 November 2012)

In view of the above, discuss the policy options for the SG government to achieve sustained economic growth, while reducing dependency on foreign labour. [25]
(economic growth)


Q14(a) What are the benefits of achieving low unemployment?
Q14(b) Assess the relative importance of the multiplier in the pursuit of low unemployment.


Q15(a) Explain the extent to which an increase in net exports will lead to a larger increase in real GDP.
Q15(b) The pursuit of higher levels of real GDP per capita leads to higher standard of living. Discuss.


Q16. The plan is for the Bank of Japan to print more money and to splurge on public works projects to reboot Japan’s recessionary economy.

(a) Explain how the above approaches will help to reboot the Japanese economy.
(b) To what extent can Singapore adopt the above approaches to solve a recession.
(recession & monetary policy)


Q17. The ultimate goal of all governments is to improve the general standard of living of its population.

(a) Explain how a government can improve the current and future standard of living of its population.
(b) Discuss the extent to which a government can assess that its goal to improve the general standard of living of its population has been achieved.


Q18(a) Explain what would affect the effectiveness of fiscal policy as a measure to reduce a country’s unemployment rate. Although the Singapore government remains cautious of deficit spending, most governments see it as an acceptable method to reduce their unemployment rates.
Q18(b) Discuss whether a government should pursue full employment at all costs.
(fiscal policy & unemployment)


Q19(a) With the use of Production Possibility Curve (PPC), explain what is meant by actual and potential economic growth.
Q19(b) Discuss the best macroeconomic policies to move the PPC outwards for different economies.
(macroeconomic policies)


Q20. Amidst the slow growth in the EU, the persistently high budget deficit and ballooning public debt have become major concerns for many governments in the EU. As a result, they have implemented austerity measures to reduce their budget deficit by ralising taxes and cutting back on public spending.

(a) Explain what would limit the effectiveness of the austerity measures in the EU.
(b) Discuss the extent to which the austerity measures in the EU will have an adverse impact on the Singapore economy.


Q21. Assess the relative importance of the various components of the circular flow of income in driving economic growth in different economies. [25]
(multiplier & economic growth)


Q22. In the study of macroeconomics, inflation can take various forms including demand-pull inflation, imported cost-push inflation wage-price spiral.

(a) Explain what is meant by these different types of inflation.
(b) Discuss the impact of high inflation on Singapore’s balance of payment.


Q23. Singapore’s unemployment rate rose to 5.1% in April to June 2011, up from the 3.1% recorded in 2019.
Ministry of Manpower, Singapore, 2020

(a) Explain why a government would want to reduce unemployment in an economy. [10]
(b) Discuss the extent to which demand-side factors are likely to account for the rise in unemployment in Singapore.


Q24. With the economy slowing, Singapore’s employee confidence in the local job market has dipped to the lowest in the region. Almost half, 40 per cent, of the workers in Singapore said there are not enough job opportunities here.
Asiaone Business, March 2012

Analyse the possible sources of unemployment in Singapore and assess whether low unemployment should be the main macroeconomic objective of the Singapore government. (25)


Q25. Singapore’s inflation rate last month rose to the highest level since December 2008, adding pressure on the central bank to damp price gains by allowing greater currency appreciation. Private home prices rose to a record in 2010, while the cost of car ownership permits surged as the economy expanded an unprecedented 14.7 percent. Source: Bloomberg, January 2011

a) Explain what causes inflation in Singapore.
b) An increase in inflation levels is more likely to cause problems for the domestic than the external sector of the Singapore economy. Discuss.


Q26a) Explain how a global recession would affect the circular flow of income in a country. [10]
Q26b) Discuss the relative effectiveness of demand side and supply side policies in sustaining economic growth in Singapore.
(demand side and supply side policies)


Q27. Singapore’s inflation unexpectedly accelerated to the fastest pace since 2008, with rising housing prices as one of the key drivers, renewing calls for a switch from a regime of managing exchange rates to managing interest rates to control for inflation. Adapted from Bloomberg, 23rd Sept 2011

Discuss the validity of this view. (25)


Q28. Labour force numbers went up as more Singapore residents joined the workforce. Labour force participation rates in 2012 also reached a record high as older residents and working-age women joined the workforce.

(a) Explain the possible conflicts in a government’s macroeconomic objectives.
(b) Discuss the extent to which the initiative of encouraging older residents and working-age women to join the labour force is effective in helping Singapore achieve its macroeconomic objectives.
(policy conflicts)


Q29. Labour productivity is the most important influence on macroeconomic outcomes. Discuss. [25]
(supply-side polices or SSP)


Q30a) Explain how changes in investment expenditure results in a larger change in national income.
Q30b) Discuss the view that a large increase in national income is often but not always desirable.


Q31. Singapore’s Consumer Price Index (CPI) rose at a moderate rate of 5.5% in 2011. A shortage of completed dwellings will cause accommodation prices to rise further in the near term. Private road transport cost is expected COE supply. However, inflationary pressures from abroad should ease, given the moderation of oil prices. remain firm in view of the tight

(a) Distinguish between the sources of inflation in Singapore.
(b) Discuss the extent to which inflation in Singapore would worsen the other macroeconomic indicators.


Q32. In response to their current economic climates, the US government posted its third consecutive annual budget deficit in excess of US$1 trillion (8.7% of GDP) in 2011. On the other hand, the Singapore government posted an overall budget surplus of S$2.3 billion (0.7% of GDP).

To what extent is the choice of government budget positions the best way for these countries to achieve macroeconomic stability? [25]
(macro econ policies)


Q33. Singapore’s ageing population has now become a greater challenge amidst weaker foreign labour growth.

Explain how raising productivity gains can give rise to conflicts in government macroeconomic objectives and discuss whether current policies adopted in Singapore need to be adjusted. [25]


Q34. A government can employ a variety of macroeconomic policies to improve on the country’s economic performance. These interventions may result in trade-offs between different. macroeconomic policy objectives.

Discuss whether consideration of such trade-offs is relevant to a government in its macroeconomic policy decisions. [25]
(policy conflicts)


Q35. Supported by strong employment creation, the unemployment rate declined to a 14-year low in 2011. This is due to strong hiring from the services sector, for example integrated resorts and construction sectors which are boosted by public projects and the economy recovering from the 2009 recession.
Source: Singapore Ministry of Manpower, 31 Jan 2012

(a) Explain possible reasons that led to the decline in unemployment rate in Singapore. [10]
(b) To what extent would standard of living in Singapore be improved as a result of the government’s intervention to reduce unemployment?


Q36. Fears are growing that the UK is running the risk of a period of painful “stagflation” – the toxic cocktail of stagnating growth, high unemployment and rising prices.

(a) Explain the possible factors that can cause stagflation in a country.
(b) Discuss whether the Singapore government should focus more on achieving low unemployment or price stability.


Q37(a) Using the multiplier, explain how deficit spending can help combat a recession.
Q37(b) Fiscal debt can adversely impact the economy and should be avoided at all cost. Discuss.
(multiplier, & fiscal policy)


Q38(a) Explain whether bad news about inflation means good news for the exchange rate?
Q38(b) Discuss the view that managing the exchange rate is the most important macroeconomic stabilisation policy in Singapore.
(inflation, exchange rate policy)


Q39(a) Explain the causes of unemployment in developed and developing nations.
Q39(b) Discuss the view that the pursuit of low unemployment ought to be the central macroeconomic goal of a government.


Q40. “Sluggish jobs growth in America has blocked rise in US interest rates.
The Straits Times, 2014

(a) Explain whether blocking a rise in interest rate could help to stimulate the US economy.
(b) Discuss the likely impact of this US interest rate policy on the Singapore economy.


Q41 “81 million jobs lost as COVID-19 creates turmoil in Asia-Pacific labour markets”. This mounting job losses in APAC are likely to restrain consumer spending and economic growth. 
Adapted: International Labour Organization

Explain what determines the aggregate level of consumption in an economy and assess if such an increase is always beneficial to an economy. [25]


Q42 Economic measures of the Singapore economy for 2019 indicate that GDP was S$507 billion while inflation rate was about 1%.
Source: Economic Survey of Singapore

(a) Explain how you might use economic indicators of GDP and inflation rate to measure the performance of an economy. [10]
(b) Discuss how might the data of GDP and inflation rate data be used to measure improvements in current and future standards of living in SG. [15]



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