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Therefore, the use of FP and MP may not be effective in the context of Singapore as Singapore has a small multiplier due to its high marginal propensity to import and high marginal propensity to save. All in all, though there are leakages in the context of Singapore, the use of FP is still one of the cornerstone of policy makers due to direct and malleability of how FP can be executed. To achieve her macroeconomic aims of sustained economic growth and price stability, a cocktail of policies is required.

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I used to think that Europe is in recession and has unstable economy

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I used to think that Europe is in recession and has unstable economy

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-Scott

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I used to think that Europe has a stable economy

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I used to think that Europe has a stable economy

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-Darren Loh

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Monetary policy refers to a central bank's actions to influence the availability and cost of money and credit as a means of helping to promote national income.
By controlling interest rates the Singapore government can reduce or increase consumption and investments. Thus influencing AD

Fiscal policy is the deliberate manipulation of government expenditure and taxes. this allows the government to increase or decrease consumption and investments by increasing or reducing corporate/personal income taxes

Supply-side policies which aim to improve the supply-side potential of the economy by making markets and industries operate more efficiently. singapore could implement interventionist ss-side policies such as R&D , retraining programmes and education . this makes the economy more productive and increases LRAS.

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Limitations of Fiscal policy:
FP is less effective in countries where the mulitplier is small due to its openness to trade and high savings rate, SG has  small and open economy and is trade dependent.
MP is not so effective in cases whereby there is inability to cut interest rates, there is only a limit to how much the government can reduce interest rate. Once nominal interest rate is reduced to zero, there is no room for further rate cuts.
Supply-side policies are not as effective as the sources of financing the policies will impose a burden on government budget possibly weakening governemnts fiscal position.

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I used to think that Europe does not have a strong economy.

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I used to think that Europe does not have a strong economy.

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-JQ

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I used to think that Europe was in a recession

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I used to think that Europe was in a recession

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-Justin Peng

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The bulk of the EU's external trade is done with China, Mercosur and the United States, Japan, Russia and non-member European states.EU members are represented by a single official at the WTO.

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The bulk of the EU's external trade is done with China, Mercosur and the United States, Japan, Russia and non-member European states.EU members are represented by a single official at the WTO.

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Europe has thriving sectors such as Agriculture & Fishing, Transport (air & rail), Investing & Banking and Manufacturing

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Europe has thriving sectors such as Agriculture & Fishing, Transport (air & rail), Investing & Banking and Manufacturing

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DSEE- Singapore faces Price Stability and Future employment problems

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DSEE- Singapore faces Price Stability and Future employment problems

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Singapore's problems of providing good jobs and raising incomes for an increasingly educated workforce, reducing the reliance on low-skilled foreign workers and narrowing an income gap that has been an increasing problem over the past decade.
While it is good news that more Singaporeans are aspiring to better jobs, it also throws up two hurdles: First, will Singapore be able to create enough good Profeesionals, Managers, Executives and Technicians jobs for them all? And second, will there be enough people to take up all the other jobs - such as cleaners and construction workers - that university graduates will probably shun, but that are still necessary for the country to function smoothly?
For years, these less prestigious jobs have been filled by foreigners, who mostly come from poorer countries in the region and are thus willing to work for lower pay than Singaporeans.

But that has kept salaries for such jobs depressed, contributing to worsening income inequality as pay in other industries rose.

Singapore's Gini coefficient, a globally used measure of income inequality, climbed from 0.457 in 2003 to 0.478 in 2012. A higher number signals greater inequality.

Although the easy availability of cheap foreign workers helped to fuel Singapore's strong economic expansion prior to the global financial crisis in 2008, such a method of growth was unsustainable. Worse, the swelling influx of foreigners started to lead to social tensions and discontent among

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Compared with its individual member countries, the euro area is a large and much more closed economy. In terms of its share of global GDP, it is the world’s third-largest economy, after the United States and China.As in other highly developed economies, the service sector has the largest share of total output, followed by the industrial sector, while the share of agriculture, fishing and forestry is relatively small. The euro area is also one of the world’s largest economies in terms of population, with almost 340 million people.

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Compared with its individual member countries, the euro area is a large and much more closed economy. In terms of its share of global GDP, it is the world’s third-largest economy, after the United States and China.As in other highly developed economies, the service sector has the largest share of total output, followed by the industrial sector, while the share of agriculture, fishing and forestry is relatively small. The euro area is also one of the world’s largest economies in terms of population, with almost 340 million people.

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I used to think that Europe has a poor and unstable economy 

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I used to think that Europe has a poor and unstable economy 

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-Darren see

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I used to think that Europe is having good economic status and not suffering at all

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I used to think that Europe is having good economic status and not suffering at all

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-Valan

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Now, I want you to think about how your ideas about Europe's economy has changed as a result of what your team has been discussing whilst completing the task above. Again in just a few sentences write down what you now think about  Europe's economy. Start your sentences with,

“But now, I think…”

Each of you must post your response in the space below this box.

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Task 3: Based on the findings from Task 1, One of your team members will need to address the policies to solve this problem.

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Task 3: Based on the findings from Task 1, One of your team members will need to address the policies to solve this problem.

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Explain and evaluate the use of 3 policies

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Task 2: One of your team member will also need to find out the current nature or structure of your economy, supported with research (eg news paper articles or video)

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Task 2: One of your team member will also need to find out the current nature or structure of your economy, supported with research (eg news paper articles or video)

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For example, is it a small and open economy? Is it a large economy? Is the economy an export-driven economy? Is it undergoing any structural changes? Please upload the links here too.

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 Task 1: Two of your team members in your cabinet need to identify the top macroeconomic problems your country is facing. Other than the video clip and newspaper provided in this page, you will need to do research (eg news  paper articles) and thereafter post in this wall.  Explain the potential sources of these macroeconomic problems your country is facing.

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 Task 1: Two of your team members in your cabinet need to identify the top macroeconomic problems your country is facing. Other than the video clip and newspaper provided in this page, you will need to do research (eg news  paper articles) and thereafter post in this wall.  Explain the potential sources of these macroeconomic problems your country is facing.

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Please write your response here, or you may just add new post. Use economic analysis (for example ADAS analysis) in your answers where possible.

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THE world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan's economy is struggling and China's growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond. But the biggest economic threat, by far, comes from continental Europe.

Now that German growth has stumbled, the euro area is on the verge of tipping into its third recession in six years. Its leaders have squandered two years of respite, granted by the pledge of Mario Draghi, the European Central Bank's president, to do "whatever it takes" to save the single currency. The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity. Prices are falling in eight European countries. The zone's overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.

Optimists, both inside and outside Europe, often cite the example of Japan. It fell into deflation in the late-1990s, with unpleasant but not apocalyptic consequences for both itself and the world economy. But the euro zone poses far greater risks. Unlike Japan, the euro zone is not an isolated case: from China to America inflation is worryingly low, and slipping. And, unlike Japan, which has a homogenous, stoic society, the euro area cannot hang together through years of economic sclerosis and falling prices. As debt burdens soar from Italy to Greece, investors will take fright, populist politicians will gain ground, and-sooner rather than later-the euro will collapse.

This parrot has ceased to be

Although many Europeans, especially the Germans, have been brought up to fear inflation, deflation can be still more savage (see article). If people and firms expect prices to fall, they stop spending, and as demand sinks, loan defaults rise. That was what happened in the Great Depression, with especially dire consequences in Germany in the early 1930s.

So it is worrying that, of the 46 countries whose central banks target inflation, 30 are below their target. Some price falls are welcome. Tumbling oil prices, in particular, have given consumers' incomes a boost (see article). But slowing prices and stagnant wages owe more to weak demand in the economy and roughly 45m workers are jobless in the rich OECD countries. Investors are starting to expect lower inflation even in economies, such as America's, that are growing at reasonable rates. Worse, short-term interest rates are close to zero in many economies, so central banks cannot cut them to boost spending. The only ammunition comes from quantitative easing and other forms of printing money.

The global lowflation threat is a good reason for most central banks to keep monetary policy loose. It is also, in the longer term, a prompt to look at revising inflation targets a shade upwards. But the immediate problem is the euro area.

Continental Europe's economy has plenty of big underlying weaknesses, from poor demography to heavy debt and sclerotic labour markets. But it has also made enormous policy mistakes. France, Italy and Germany have all eschewed growth-enhancing structural reforms. The euro zone is particularly vulnerable to deflation because of Germany's insistence on too much fiscal austerity and the ECB's timidity. Even now, with economies contracting, Germany is still obsessed with deficit reduction for all governments, while its opposition to monetary easing has meant that the ECB, to the obvious despair of Mr Draghi, has done far less than other big central banks in terms of quantitative easing (notwithstanding this week's move to start buying "covered bonds").

If there was ever logic to this incrementalism, it has run out. As budgets shrink and the ECB struggles to convince people that it can stop prices slipping, a descent into deflation seems all too probable. Signs of stress are beginning to appear in both the markets and politics. Bond yields in Greece have risen sharply, as support for the left-wing Syriza party has surged (see article). France and Germany are trading rhetorical blows over a new budget proposal coming out of Paris.

Joining the bleedin' choir invisible

If Europe is to stop its economy getting worse, it will have to stop its self-destructive behaviour. The ECB needs to start buying sovereign bonds. Germany's chancellor, Angela Merkel, should allow France and Italy to slow the pace of their fiscal cuts; in return, those countries should accelerate structural reforms. Germany, which can borrow money at negative real interest rates, could spend more building infrastructure at home.

That would help, but not be enough. It is a bit like the early years of the euro debacle, before Mr Draghi's whatever-it-takes pledge, when half-solutions only fed the crisis. Something radical is needed. The hitch is that European law bans many textbook solutions, such as ECB purchases of newly issued government bonds. The best legal option is to couple a dramatic increase in infrastructure spending with bond-buying by the ECB. Thus the European Investment Bank could launch a big (say €300 billion, or $383 billion) expansion in investments such as faster cross-border rail links or more integrated electricity grids-and raise the money by issuing bonds, which the ECB could buy in the secondary market. Another possibility would be to redefine the EU's deficit rules to exclude investment spending, which would allow governments to run bigger deficits, again with the ECB providing a backstop.

Behind all this sits a problem of political will (see article). Mrs Merkel and the Germans seem prepared to take action only when the single currency is on the verge of catastrophe. Throughout Europe people are hurting-in Italy and Spain youth unemployment is above 40%. Voters vented their fury with the established order in the EU's parliamentary elections earlier this summer, and got very little change. Another descent into the abyss will test their patience. And once deflation has an economy in its jaws, it is very hard to shake off. Europe's leaders are running out of time.

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THE world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan's economy is struggling and China's growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond.

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Video Clip on Eurozone economy: Italy

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How did Italy become more sceptical about membership in the EU? FT Rome bureau chief James Politi visits Parma in northern Italy and asks students, shop owners, the mayor and business people about the matter.

Transcript

See our accessibility page for more information about transcripts

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How did Italy become more sceptical about membership in the EU? FT Rome bureau chief James Politi visits Parma in northern Italy and asks students, shop owners, the mayor and business people about the matter. See our accessibility page for more information about transcripts

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Videoclip on the Eurozone Economy

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The European Central Bank has jolted investors with a bold package designed to stimulate the eurozone's economy, cutting interest rates to a new low and expanding QE. FT economics editor Chris Giles talks to FT editor Lionel Barber about whether it will be enough.

Transcript

See our accessibility page for more information about transcripts

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The European Central Bank has jolted investors with a bold package designed to stimulate the eurozone's economy, cutting interest rates to a new low and expanding QE. FT economics editor Chris Giles talks to FT editor Lionel Barber about whether it will be enough.

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Task 4: Based on the findings from Task 1,2 & 3, the group leader will evaluate and synthesize (similar to writing evaluative conclusion) whether the use of these policies will be effective in addressing these macroeconomic problems. 

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Task 4: Based on the findings from Task 1,2 & 3, the group leader will evaluate and synthesize (similar to writing evaluative conclusion) whether the use of these policies will be effective in addressing these macroeconomic problems. 

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You may wish to use specific judging criteria to assess the suitability of these policies.

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As an economic advisor (group leader), your role is to recommend and justify whether the use of policies have been effective in tackling recent macroeconomic problems faced by your country. Your job is to discuss with a panel of ministers (your team members) to do research and to propose solutions (policies) to solve these problems. Thereafter, you need to evaluate if the use of these policies  are effective or appropriate for your country.

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Before commencing the activities (Task 1 to 4 below) spend 3 minutes to think of this question:

You may have some initial ideas about Eurozone economy. In just a few sentences, I want you to write what it is that you used to think about Eurozone economy. Take a minute to think back and then post your response in the following format:

“ I used to think that Europe is ..........................

Each of you must post your response in the space below this box.