Identify and discuss on the economics concepts and models that will be suitable for analysing the news article
Apply economics concept and models, identified to show your understanding of the news
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HOW THE GLOBAL DEBT CRISIS COULD AFECT YOU
Reasons for selecting the article
The reasons for choosing the article are that firstly, it stated that aggregates for economic consequences, GDP, recession and unemployment have greatly affected Singapore economy. The article also focused on the nation behaviour of the declining economy for US and Greece due to finance crisis which in turn affect other nations, in this case, Singapore.
In fact, the article briefly explained how aggregates like national income and output have affected US and Greece economy, which in turn affected Singapore. It will be further discussed whether this mentioned global crisis will affect Singapore inflation, causing a rise in unemployment rate and the slowing of GDP growth for emerging markets.
Summary of the article
The article comments on how two of Singapore’s trading partners, mainly US and Greece, are hurting themselves with their debt problems and the impact of their problems on Singapore economy. It briefly describes what US debt ceiling is and the heavy borrowing of Greek government which has greatly contributed to the global debt crisis.
It also explains on US debt problem and other aftershocks if the debt ceiling is not rise.
Moreover, it explains the debts that Greece had incurred and what will happen if Greece defaults on its debts. Lastly, it further highlighted that the Singapore economy is affected by the two countries’ debt problems.
Identify and discuss on the economics concepts and models that will be suitable for analysing the news article
Macroeconomics model is concerned either with the economy as a whole or with major aggregates such as national income and output, price inflation, total consumption, investment spending and also, the unemployment rate which make up the economy (Stonecash, Gans & King Mankiw, 2005).
From the model, each aggregate is closely related, for example, national income is the amount earned by the people living in the country, including labour and capital investment and foreign trade. For labour and capital, it has fallen under the concept of scarcity where they are part of the resources that are used to produce goods and services. In other words, labour can represent employment where there will be no goods and services if there’s no employment.
As for price inflation, it is the overall general upward price movement of goods and services in an economy with the reduction in the purchasing power of a currency. Also, not to mention about GDP where both national income and price inflation are used as part of the calculation which is used as an indicator for the health of a nation’s economy.
Hence, the aggregates from the concept and model will be suitable for the news article to analyse US and Greece debt problems which will eventually affect Singapore in terms of their national income, Gross Domestic Product (GDP), inflation and unemployment.
Apply economics concept and models, identified to show your understanding of the news
In the article, some analysts have said that the debt problems that is hurting US and Greece have had an effect on Singapore economy especially when they are our trading partners. Although the exposure of Singapore’s banks to sub-prime mortgage is limited, the debt crisis will still affect Singapore with the fall the non-oil exports in manufactured goods that are induced by the overall deterioration of economic
