Discuss the extent to which the austerity measures in the EU will have and adverse impact on the Singapore economy.
Analysis of The Question
For this question, the requirement of the question is to comprehensively explain how the austerity measures in the EU may cause Singapore to deviate from its macroeconomics objectives in terms of healthy balance of payments, economics growth, low unemployment as well as price stability
Evaluate as to whether such adverse impacts poses a real threat to Singapore, given her economic relations with EU, as well as her ability to minimize the adverse impacts of austerity measures affecting the economy.
Source of Information
Part of knowledge needed for this question:
How contractionary fiscal policy held in other economies affects the country’s balance of payments, unemployment level, economic growth as well as inflation.
How the decrease in aggregate demand (decrease in export demand and foreign direct investment) contributes to lower actual growth through the Aggregate Demand and Aggregate Supply analysis and reverse multiplier process.
Economic characteristic of Singapore as small and open economy.
How the changes in external demand and capital inflow will affect Singapore seen from the aims of government
Measures which Singapore can undertake to reduce external interdependency