Sample Economics Essay Questions – External Economy

JC Economics External 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 External Economy. Are you struggling for your H2 Econs (9757 Syllabus) Paper 2? 


In order to do well for this topical essay, you need to be well versed with the Balance of Payments, Exchange Rates, as well as the various policies of Expenditure Switching and Expenditure Dampening, in order to improve a nations’ BOT/


Here is sample listing of External Economy essay question list:

Q1. The Monetary Authority of Singapore will continue with the policy of a modest and gradual appreciation of the S$ foreign exchange rate to ensure medium-term price stability.
(MAS Policy Statement)

(a) Explain how exchange rates are determined in Singapore.
(b) How far do you agree with the proposition that an appreciating Singapore dollar will lead to price stability?
(exchange rates)


Q2. Discuss the significance of the Marshall-Lerner condition, multiplier size, and factor endowment in influencing macroeconomic policy decisions in Singapore.
(exchange rates, demand-side management policy, trade)


Q3. A central bank is an institution which manages a country’s interest rates and exchange rates.

(a) Explain how a central bank can manipulate the external value of their currency.
(b) Discuss the extent to which central bank interventions can impact an economy.
(exchange rates)


Q4. In recent years, MAS has adopted a gradual appreciation against other major currencies.

In view of the slow recovery in the US and a stagnant economy Europe, assess whether the macroeconomic benefits of this policy will outweigh the costs for Singapore. [25]
(exchange rates)



Q5(a) Explain how a surge in capital inflow is likely to affect the current account of a country. [10]
Q5(b) Discuss the problems a government is likely to face in achieving a healthy balance of payments when the country experiences a surge in capital inflow.
(current account)


Q6. External instability such as excessive trade imbalances and large exchange rate fluctuations generally has negative economic consequences.

Assess the extent to which an improvement in the living standards of an economy requires that external stability be the top economic priority. [25]
(balance of payments)



Q7. Discuss the relative importance of the multiplier, the price elasticities of demand for imports and exports, and interest elasticity in determining the effectiveness of macro economic policies in Singapore and the USA.
(exchange rates)


Q8. “The United Kingdom (UK) is in recession and its trade deficit ballooned to its highest level since modern records began, sparking concerns among prominent economists.”
(Source: The Guardian)

a) Explain the impact of a worsening trade deficit on an economy.
b) Assess whether exchange rate policy is the most effective policy to solve UK’s problems.
(current account)


Q9(a) Explain the links between interest rate and exchange rate.
Q9(b) To what extent does the Eurozone debt crisis affect the Singapore government’s decision to continue using the exchange rate as a tool to achieve non-inflationary economic growth?
(exchange rates)


Q10(a) Analyse the effects of changes in exchange rate and interest rates on an economy’s balance of payments. [10]
Q10(b) Discuss the view that policies to correct a balance of payments deficit on current account always result in lower standard of living in an economy. [15]
(reference: SG BOP data)


Q11(a) Explain how changes in inflation rate and domestic interest rate can cause a deterioration of a country’s balance of payments position. [10]
Q11(b) Assess whether policies designed to improve a country’s current account position can improve the standard of living. [15]



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