An interesting news article which you might want to look at:

MPs raise concerns about Singapore's monetary policy
By Wong Siew Ying, Channel NewsAsia Posted: 27 February 2008 2142 hrs

When asked whether the Singapore dollar should be allowed to appreciate at a faster pace to tackle inflation in Parliament on Wednesday, Minister for Trade and Industry Lim Hng Kiang noted that Singapore cannot totally insulate itself from the effects of global prices. He said the Monetary Authority of Singapore (MAS) did allow the currency to appreciate at a faster rate during its last policy review in October 2007 amid uncertainties in external economic and financial markets. Although such move helped to counter inflationary pressure, Mr Lim, who is also the deputy chairman of MAS, reminded the House that there was a limit to how much the Singapore dollar can appreciate without hurting growth.

The other question raised was whether interest rates can be used as another tool to manage Singapore's monetary policy. Mr Lim said, "Studies by MAS over the years have shown consistently the exchange rate has the most significant impact on growth and inflation than interest rate. Once we have an open capital account, the monetary policy can only influence either the interest rate or the exchange rate but not both." "If you try to have an exchange rate at a certain level, then you still want to raise (the) interest rate… what will happen is you will attract a lot of inflow of foreign capital and your exchange rate (will) strengthen far beyond… (the) intended level," he added.

1. Define what is exchange rate.
2. Explain the meaning of appreciation of the Singapore dollar.
3. How can the exchange rate affect economic growth and inflation?
4. According to Mr Lim, why is it that the "monetary policy can only influence the interest or the exchange rate but not both"?
5. What is a capital account?

You can download the 2006 paper and marking scheme from
http://www.cie.org.uk/qualifications/academic/middlesec/olevel/subject?assdef_id=906

Just a glimpse of the paper Q1:

Trade and production in Bangladesh

At one time, international trade agreements ensured an export market for clothes made in Bangladesh, but these were due to end in 2005. It was feared that many workers in Bangladesh would lose their jobs as a result. The Foreign Minister hoped that the trade in medicines would grow sufficiently to reduce that unemployment. The Foreign Minister said that in 2004 Bangladesh was exporting medicines to 60 countries and could produce them up to 70% cheaper than the Developed World. He said that if Bangladesh, a developing country, could get 2% of the global trade in medicines it could be worth many times the clothing exports that Bangladesh had lost.

In 2004, 150 local firms and 6 multi-national companies manufactured medicines in Bangladesh. However, the production of medicines employed just 50 000 workers and most future jobs would require highly trained technicians. The clothing trade employed 1.8 million unskilled workers and accounted for more than 75% of Bangladesh’s exports.

(a) State four ways in which multi-national companies can help developing countries such as Bangladesh. [4]

(b) International trade agreements can protect jobs. Despite this, some economists prefer free trade to trade agreements. Explain why. [6]

(c) Summarise the main argument of the Foreign Minister of Bangladesh. [4]

(d) Why might it be difficult for employment in the clothing industry to be replaced by employment in the manufacture of medicines? [6]

1 (a) employment, multiplier effects (do not expect this term), boost to exports, by encouraging development of new skills, introducing new technologies, improved working conditions, any other valid points, e.g. improvement in infrastructure.
1 mark each, maximum (4). [4]

There is no mark for a definition of a multi-national company.

(b) Analysis of the idea of specialisation and opening markets worldwide, production at lower costs, increased efficiency, more competition, wider choice, lower prices. Note: core candidates are required to know about specialisation at international level but not about comparative advantage.
Identification up to 3 marks. Explanation up to 3 marks. [6]
If candidates only deal with the first sentence, maximum of 4 marks.

(c) There will be unemployment if clothing manufacture ceases (1), but this could be replaced by manufacture of pharmaceuticals (1), boost exports (1), the great advantage that B has, was that its production was much cheaper than other countries (1). Straight copying: 2 marks maximum. [4]

(d) One industry is very labour intensive, the other is not. 50,000 currently in medicines, 1.8m currently in clothing.

Occupational immobility of labour. e.g. lack of skills.
Multi-national companies may be wary of locating in Bangladesh, due to possible instability.
(Note – we do not expect candidates to demonstrate a detailed knowledge of Bangladesh.) [6]