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Economics Tuition – Explain why inflation exists in the housing market

Economics Tuition – Explain why inflation exists in the housing market.

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Given that housing is an asset to home-owners, the rise of the price of assets will cause the individuals to raise the price of their factor services as they peg their factor cost to the price of the housing prices. The price of assets will rise due to the inflow of hot money, which refers to short-term capital inflow by speculators in the housing money. Furthermore, the rise in price of assets will raise the value of mortgage and cost of payment, inducing a rise in rental cost. Consequently, there will be a cyclical increase in price of housing, with inflationary pressures. Hence, there is asset-based inflation.


This article is contributed by Mr. Simon Ng, founder and principal JC Economics Tutor of Economicsfocus, who has 20 years of teaching experience. Currently, Mr. Simon Ng provides specialized Economics Tuition and GP Tuition. To read more articles on Economics issues and skills development, please refer to the JC Economics Essays blog.

Economics Tuition – Explain the problems of comparing living standards of Singapore over time

Economics Tuition – Explain the problems of comparing living standards of Singapore over time.

In Singapore, the enforcement of a good crime enforcement system has significantly reduced the level of crime rates and illegal activities in Singapore. However, in the past, where the presence of illegal activities/pirated transactions was rampant, it may have otherwise undermined the level of Gross Domestic Product (GDP) and hence living standards by excluding a large portion of the income and activities generated in the underground economy. Hence, there is an overestimation of the improvement in living standards of Singapore.

Furthermore, if the percentage increase in price level or population or both are to rise above the percentage increase in GDP, the percentage increase in real per capita income will not rise, implying that there is no improvement in standard of living (SOL).

The increase in national income may not imply that the SOL of the whole nation has improved since the increase in real per capita due to a rise in GDP may not take into consideration the actual distribution of income. This means that not all the citizens will experience rise in real per capita income, indicating an increase in purchasing power.

It is also important to take note of the composition of production. Even if the GDP increases does contribute to growth in production capacity, the low level of production of welfare good such as does not improve the lives of the people.

Lastly, it is imperative to assess the qualitative aspect of standard of living such as the stress level and level of externalities. Therefore, qualitative indicators like Measurement of Economic Welfare (MEW) or Human Development Index (HDI) will be needed as MEW reflects the monetized value of intangible aspects of SOL, while HDI reflects the progress of well-being of the individuals.


This article is contributed by Mr. Simon Ng, founder and principal JC Economics Tutor of Economicsfocus, who has 20 years of teaching experience. Currently, Mr. Simon Ng provides specialized Economics Tuition and GP Tuition. To read more articles on Economics issues and skills development, please refer to the JC Economics Essays blog.

Economics Tuition – Using the Production Possibility Curve, explain how an increase in government spending contributes to economic growth

Economics Tuition – Using the Production Possibility Curve, explain how an increase in government spending contributes to economic growth

Economic growth refers to the growth of production, seen in terms of actual and potential production capacity. Actual economic growth, also known as short term growth, is commonly measured in terms of a percentage change in the real Gross Domestic Product (GDP). The Production Possibility Curve (PPC) illustrates the resource and production capacity an economy can attain with the given amount of resources and level of technology.

The increase in government expenditure, such as the provision of subsidies to consumers, raises consumption and investment, so as to raise aggregate demand, production and national output. Consequently, production level contributes to an increase in the actualized production of goods and services, thus achieving higher actual economic growth.

Economics Tuition - National Income Accounting and Economic Growth - Diagram

Economics Tuition – National Income Accounting and Economic Growth – Diagram

As seen from the PPC, the increase in government spending contributes to the shift of the production level from point A to point B, thus attaining actual economic growth.


This article is contributed by Mr. Simon Ng, founder and principal JC Economics Tutor of Economicsfocus, who has 20 years of teaching experience. Currently, Mr. Simon Ng provides specialized Economics Tuition and GP Tuition. To read more articles on Economics issues and skills development, please refer to the JC Economics Essays blog.

Economics Tuition – What is standard of living?

Economics Tuition – What is standard of living?

Standard of living refers to the average quality of life of a population that includes the material and non-material aspects of life. The material aspect or quantitative value of SOL is determined by the quantity of goods and services enjoyed by the individual through the value of real per capita income which can be derived from real GDP, whereas the non-material aspect or qualitative aspect of SOL includes things such as life expectancy, crime rates, education standard, etc.


This article is contributed by Mr. Simon Ng, founder and principal JC Economics Tutor of Economicsfocus, who has 20 years of teaching experience. Currently, Mr. Simon Ng provides specialized Economics Tuition and GP Tuition. To read more articles on Economics issues and skills development, please refer to the JC Economics Essays blog.