Economics Project Case

Table of Contents

1. Article 1 – Higher wages, costs and consumer price ahead

1.1 Introduction 3

1.2 Analysis – Cost-Push Inflation 4

1.3 Policies to curb inflation 5

1.4 Conclusion 5

2. Article 2 – Expect 4,800 private homes from 17 lauches to go on sale from now till year end

2.1 Introduction 6

2.2 Analysis – Demand & Supply 6

2.3 Cause of Demand & Supply 8

2.4 Recommendations 9

3. Referencing 10

Topic : Cost-Push Inflation, Exchange Rate & Supply-Side Policy

Article 1 : Higher wages, costs and consumer prices ahead

1.1 Introduction

According to The Business Times news article published on 30th Oct 2013, the Monetary Authority of Singapore (MAS) projected that inflation will be 2.5-3% in 2013 and 2-3% in 2014.

In line with robust economic growth, overall job growth in the first six months has an increase of 62,600 workers compared to 58,900 in H1 2012. Resident labour force participation rate is estimated to rise to 67% this year. This rise is due to the slow pace in resident population growth and continuing demand for manpower.

Foreign worker employment growth rate have slowed down in H1 2013 after government has implemented rules to tighten the inflow of foreign workers. In the next few years, the government will continue to fine-tune the labour market and shift the focus to productivity growth. This will add pressures on to businesses.

Businesses are more likely to pass on their accumulated cost increase to consumers in order to rebuild their profit margin. This will result in higher cost of living.

1.2 Analysis – Cost-Push Inflation

Cost-push inflation occurs when the general price level rise due to the increase in per-unit production costs (Unit cost = Difference between total input cost over unit of output). When the cost of production increases, it will lead to a decrease in short-run aggregate supply. Short-run aggregate supply (SRAS) shows the relationship between the quantity of real GDP supplied and the price