economics tuition Tag

  • BOP deficit could be caused by Current Account deficit possibly due to import expenditure (M) exceeding export revenue (X)
  • This could be due to a relatively higher rate of inflation in the country relative to other countries. This could be due to increases in cost of production, such as strong increase in wages or fall relative productivity levels.
  • Cost of producing goods and services and hence the price at which they are sold is higher, making it less price competitive in international markets as they are now more expensive than the trading partner’s domestically produced goods. Quantity demanded for exports decreases as foreigners switch from that country’s exports to domestically produced goods or to exports from other countries. Assuming demand for exports is price elastic, quantity demanded for exports decreases more than proportionately, hence export revenue (X) falls.
  • Also, demand for imports rises as locals switch from domestically produced goods and services to imports, which are now relatively cheaper.
  • Hence import expenditure (M) rises. Decrease in X and increase in M cause net export revenue (X-M) to fall.


  • Current Account deficit could also be caused by an appreciation of the exchange
  • When the currency appreciates, price of exports in foreign currency increases, making exports less price competitive in international markets. Quantity demanded for exports decreases as foreigners switch to domestically produced goods or to exports from other countries.



  • At the same time, price of imports in domestic currency decreases, making imports more price competitive in the domestic market. Quantity demanded for imports increases as locals switch from domestically produced goods to imports.
  • Assuming the ML condition holds whereby the sum of the price elasticise of export and import is more than 1, (PEDx + PEDm > 1), net export revenue, (X-M) will fall


  • Current account deficit could be brought about by a country experiencing a faster rate of economic growth than the countries it exports to. These would be the case if growth is being generated from domestic sources – i.e. there is a domestic consumption boom or increase in government expenditure, rather than increase in net exports.
  • An increase in NY will result in domestic consumers demanding more goods and services for consumption, both those which are domestically produced and imports. As a result there will be an increase in import expenditure
  • As other countries experience a slower rate of growth, export revenue is not increasing as much. As a result, there is a fall in (X-M)


Body (Capital and Financial Acct Deficit) 

  • BOP deficit could be caused by capital and financial account deficit, brought about by a net 
outflow of short or long term capital.
  • A net outflow of short-term capital could be brought about by a decrease in relative interest rates, as this means that financial institutions are now able to obtain higher returns on their funds in other countries. This would lead to less short-term capital inflows and/or a more short-term outflow.

A net outflow of long-term capital, in the form of Foreign Direct Investment (FDI) would also cause a BOP deficit. There would be net decrease in FDI flows if the profitability of investment falls. This could result from government policies becoming less favourable, for example a withdrawal of preferential tax concessions or grants. This results in multi-national corporations (MNCs) moving their investments to other countries offering more preferential treatment. It could also be brought about by a deterioration of the investment climate in general. For example, a strengthening in trade union power resulting in more strikes and/or wage demands will induce firms to seek more attractive investment destinations abroad.

Learn from from Anthony Fok – JC Economics Tutor

Cigarettes is a type of demerit good as it exhibits negative externalities from consumption. They are deemed to be socially undesirable. Negative externalities refer to incidental costs to third parties that are not taken into account by those who are involved in the activity.

A smoker will only take into account his private costs (price of the packet of cigarettes and own smoking-related health problems) and private benefits (satisfaction derived from smoking).

However, he does not consider the negative externalities that would be generated by his smoking (smoking-related health problems on passive smokers, costs incurred to society for having to provide healthcare for smoking-related health problems as well as clearing and maintenance costs for the litter).

The social cost from undertaking the activity is the private cost faced by the smoker as well as external costs accruing to third parties. Negative externalities will lead to divergence of private cost and social cost. With the presence of negative externalities, social cost will be greater than private cost.

Market failure is likely to exist because the negative externality is underpriced by the price mechanism. If cigarettes were provided through the free market, social costs of smoking exceed the private costs. Private optimum occurs at Qe where PMB (the benefit to the individuals of smoking the last unit of cigarette) equals PMC (the cost to the individual of smoking the last unit of cigarette).

The socially efficient level is where SMC=SMB i.e. at output Qs. Therefore, there are too many scare resources devoted to the consumption of cigarettes. There will be over-consumption of cigarettes because society values an extra unit of cigarette less than what it would cost society to produce it. Shaded area represents the welfare loss to society as a result of this over-allocation of resources. Society as a whole could be made better off if the current level of cigarettes were reduced to socially efficient level. (Qs)

Learn more from Anthony Fok by attending his economics tuition classes now!

Economics News by Econs Tutor Anthony Fok
Topic: Investments

Singapore firms expect business conditions to worsen from October till next March, though the gap between pessimists and optimists has been closing, according to official quarterly surveys on Friday. The difference was clearest in the services sector, where a net-weighted balance of 5 per cent of firms expect worse conditions – an improvement from 31 per cent in the previous quarterly survey, which covered expectations for July till December 2020. In manufacturing, a net-weighted balance of 3 per cent expect the operating environment to worsen in the next six months compared to the third quarter of 2020, improving from 7 per cent in the previous quarterly survey. This was with a weighted 18 per cent of firms seeing a better business outlook, while a weighted 21 per cent expect a worse one, according to the Singapore Economic Development Board.

Question for discussion during JC 2 economics tuition classes:

  1. Explain the various factors influencing level of investments in Singapore

Economics News by Econs Tutor Anthony Fok
Topic: Unemployment

Singapore’s total employment contracted at a slower pace in the third quarter of 2020, with resident employment rebounding to near pre-pandemic levels, according to preliminary estimates from the Ministry of Manpower (MOM). Total employment, excluding foreign domestic workers, shrank by 26,900 in Q3, slowing down from the 103,800 seen in the previous quarter. The ministry attributed the decline to the continued contraction in non-resident employment. Retrenchments continued to rise and have exceeded the peak of previous recessions with the exception of the 2009 global financial crisis, which saw 12,760 layoffs. In Q3, there were 9,100 retrenchments, compared with 8,130 in Q2. On the whole, unemployment rates continued to rise. Overall unemployment rate rose to 3.6 per cent in September compared to 3.4 per cent in August; resident unemployment rate inched up to 4.7 per cent from 4.6 per cent and citizen unemployment rate went up to 4.9 per cent from 4.7 per cent over the same period.

During a media briefing, Manpower Minister Josephine Teo said the growth in resident employment is partly attributed to the resumption of activities as Singapore began its phased reopening, following its partial economic shutdown during the “circuit-breaker” period in April and May.

“Some positions had gotten vacated in the second quarter, and so in the third quarter, since business activities have resumed, so there is a little bit more backfilling of those positions,” Mrs Teo said.

In addition, employers and workers have been very invested in collective efforts to save jobs, such as through wage cuts and retraining programmes, she said. However, Mrs Teo said it would not be wise to assume that the rebound in resident employment levels can be sustained without effort. While the fourth quarter of the year typically sees an uplift in past years, this is due to increased seasonal spending, travel and tourism, which are subdued this year, she said, as consumer sentiment turns cautious and borders remain largely closed. She added that many countries are now fighting a second or even third wave of infections, so one should not assume the path ahead to be easy.

“We have a little bit of a reprieve now – the third quarter is, to me, a source of relief. But it simply means we’ve gotten ourselves to a level where the ship is more stabilised but we need to put in the effort to keep it sailing,” she said.

Questions for discussion during economics tuition classes:

  1. Explain the various causes of unemployment in Singapore.
  2. Discuss the policies available to solve the unemployment problem in Singapore.


Signs You May Need Economics Tuition

The concern about whether to take up tuition is not only unique to the economics subject. As we become a more competitive society, everyone aims to get the best help to help ace their examinations. With so many tuition centres popping around the island and peers going for different tuition classes, it is no wonder that students raise this question on whether they should enrol into tuition classes too. Here are some signs to look out for if you need economics tuition:

1. Concepts are hard to grasp

Are you still facing difficulties in understanding the economics concepts even after reading your school materials and consulting your school teachers? If so, you may need an extra help in guiding you through these concepts. Economics can be a very challenging subject to many since it is a new subject for JC students. The concepts may not settle well in your understanding as some principles may be too complex.

In economics tuitions, tutors design their lessons in such a way that students can understand complex concepts easily and also teach them the skills to apply these concepts in their answers. Economics notes prepared by tutors are very effective for revisions. Tutors are also more than willing to help their students through consults or providing personalised feedback to students’ work. These are very beneficial for students to get the help they need to master the economics concepts.

2. Poor grades

Have you been scoring grades that may hinder your promotion to JC2 or doing well for your A-Level examinations? You may not be getting the right help needed for you in school. Poor grade is an obvious sign that you have not understood the economics concepts well and/or the examination requirements for your economics answers are not met.

As mentioned above, economics tuition helps you understand difficult concepts in an easier way. Tuition lessons also helps you to identify the question requirements so that you can apply your concepts accurately. Tutors are open to helping you clarify your doubts in any aspects of economics so ask away!

3. Different teaching style

You could be scoring decently, but the teaching style in school may not suit your learning needs. It is not uncommon for school teachers to have teaching styles that are not effective for some students as everyone learns differently. This may make you lose interest in economics. Similarly, you can choose the right tuition class which has the teaching style that fits your learning needs. This would make economics an enjoyable subject for you.

4. No time for revision

Many students’ schedules are packed with co-curricular activities (CCAs) commitments in school. These CCAs take up a lot of time as they require students to meet up for 2 to 3 times a week, or even more when competitions or performances are getting closer, depending on which CCA they joined. This leaves students with no time to study or revise what they have learnt in school. Especially when economics requires practice in applying concepts and to write economic arguments, students need time to master the subject requirements.

Usually, tuition centres offer classes during the weekends. When students enrol into tuition, they set aside this time to attend tuition classes, which helps them to catch up with their peers. They are able to revise and also learn how to apply examination strategies effectively. Tuition helps them to balance out their time for their CCA commitments and their studies.

Join us at Economics Tuition for the best help in economics.


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