In 2013, the Singapore Government was concerned that its economy might experience a recession. It was introducing a range of supply-side policy measures to increase productivity, avoid a recession and achieve its other aims for the economy. It was also trying to reduce the international value of the Singapore dollar.

Mark scheme

Marking points from the official mark scheme (May/June 2015). The mark or mark type is shown in brackets.

1. [1] fall in a country's output/GDP
2. [1] over a period of six months/two successive quarters
3. [1] a high demand for the currency
4. [1] this may arise from e.g. good quality/lower price of exports/speculation that the currency will rise in the future
5. [1] a low supply of the currency
6. [1] due to, for instance, a low demand for imports/a low level of investment abroad
7. [1] government setting a high exchange rate
8. [1] by buying the currency/raising the exchange rate
9. [1] improved education/training
10. [1] may raise workers' skills
11. [1] increase output per worker hour
12. [1] privatisation
13. [1] may increase competitive pressure on firms to keep costs low
14. [1] encourage more investment
15. [1] increase output per factor hour
16. [1] reforming trade unions
17. [1] may reduce restrictive practices
18. [1] this may allow firms to use their workers more efficiently
19. [1] increase output per worker hour
20. [1] cutting corporation tax
21. [1] may increase profit
22. [1] increase investment
23. [1] increase output per factor hour
24. [1] giving subsidies
25. [1] to encourage firms to invest in advanced technology, engage in research and development and/or train workers
26. [1] it will lower export prices
27. [1] and raise import prices
28. [1] make domestic products more internationally competitive
29. [1] this may raise export revenue and lower import expenditure
30. [1] if demand for exports and imports is elastic
31. [1] this may improve the current account position/reduce a current account deficit
32. [1] producing more domestic products
33. [1] may raise output/GDP
34. [1] cause economic growth
35. [1] raise employment/reduce unemployment
36. [1] increase income
37. [1] and living standards
38. [1] if the value was being maintained by the government above the equilibrium level
39. [1] reserves of foreign currency may not now have to be used
40. [1] these could be used for another purpose
41. [1] interest rate may not have to be as high
42. [1] a lower interest rate may stimulate economic activity
43. [1] higher import prices may cause inflation
44. [1] raise costs of raw materials
45. [1] increase costs of production
46. [1] put less downward pressure on domestic firms to be price competitive
47. [1] lower prices of exports may be offset by low quality of exports
48. [1] fall in incomes abroad
49. [1] increase in trade restrictions imposed by foreign governments
50. [1] demand for exports and imports may be price inelastic
51. [1] in this case export revenue may fall
52. [1] and import expenditure may rise