Economics Tuition – Video by Economics Focus

This e-learning video developed by JC Economics Tutor Simon Ng of Economics Focus is targeting the topic of Inflation. It focuses on the negative impacts of inflation, which implies the sustained increase in general price level, and why the government should prioritize on price stability. This question demands students to understand price stability as one of the macroeconomic objectives and its economic benefits to SIngapore.

Singapore experienced a quarterly growth rate of -0.7% from April to June 2012. “Inflation is harmful to an economy and hence it should be the priority of the Singapore government to reduce inflation.” Discuss. [15]

Analysis of The Question

For this question, the requirement of the question is to be able to explain the macroeconomic aims of the government such as economic growth, healthy balance of payments and low unemployment, while comprehensively explain the importance of low inflation.
Also, explain why inflation should not be the sole aim of the government, as well as the determinants through which low inflation should be prioritised

Source of Information

Part of knowledge needed for this question:

  • Explain objectives of economic growth, healthy balance of payments, full employment

  • Explain the benefits of low inflation

  • Explain how low inflation can solve the negative impact on other aims of government

  • Explain why other aims are important in helping to maintain price stability

  • Explain why achieving low inflation is less costly than achieving low unemployment

  • Explain the economic characteristics of Singapore which makes low inflation an important aim

  • Explain the different economic conditions in affecting the relative importance of policies