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Economics WEC14/01 June 2023

Economics WEC14/01 June 2023

1. Primary product dependency constraint on growth and development linked to Prebisch–Singer hypothesis; capital expenditure increase exemplified by government investment in infrastructure; international competitiveness improvement via privatisation of state-owned enterprises.

2. Global container shipping cost trends cause increase in production costs, potential rise in inflation, reduced trade proportion of world GDP.

3. Absolute advantage: Country Z surpasses Country M in production of televisions and computers; specialization and trade beneficial for both countries.

4. Southeast Asian economic growth influenced by increased tourism, export growth in commodities (coal, rubber, palm oil), terms of trade improvement; Thailand and Singapore face low growth due to inflation outpacing GDP growth and external shocks such as China’s slowdown.

5. Currency appreciation strategies include central bank foreign currency transactions to buy domestic currency and sell foreign currency to increase currency value.

6. Economic benefits of increased tourism in Southeast Asia include higher GDP growth exceeding inflation and government relaxation of border controls promoting tourism surge; government price controls help manage inflation risks in commodity prices.

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Classification: Unit 4
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Last update: 4 months ago
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