Macroeconomic Policies
H1 Economics - syllabus 8843, 2026
Original teaching notes
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Understand fiscal, monetary and supply-side policies, including Singapore's exchange-rate framework. Use the cause of a problem to judge effects on output, prices and households.
- Choose the policy after identifying the problem
The same fall in output can have different causes.
- How does fiscal policy change demand?
Government purchases affect spending directly; tax changes work through private decisions.
- Separate transfers from government purchases
A transfer changes who can spend; it does not itself buy output.
- Why might a fiscal package have a small effect?
Follow the money and check what can be produced.
- A deficit today is not the whole fiscal story
Judge whether commitments can be financed over time.
- Trace an interest-rate change to spending
The policy rate must affect borrowing, saving and investment decisions.
- When will cheaper borrowing fail to lift spending?
Willingness and ability to borrow both matter.
- Trace a stronger or weaker currency
Separate export demand, import costs and the final outcome.
- How does Singapore use the exchange rate?
The policy concerns a currency basket, not a fixed US-dollar price.
- How can policy raise productive capacity?
Identify the resource or productivity constraint being changed.
- When will a supply-side programme work?
Check whether the intervention removes the actual bottleneck.
- Build a policy mix with a clear division of work
Explain what each measure addresses and when it can help.