2011H2Prelim2Q2(a)(i)ComparetheGDPgrowthofChinaandIndiafrom2007to2009.[2]BothareGDPgrowthofChinaandIndiaaredeclining.However,thegrowthrateofChinaremainshigherthanIndia’s.(ii)WhatevidenceiscontainedinthedatatosuggestthatAsiadidnot[2]“decouple”fromtheWest?ThegrowthratesofChinaandIndiamovesintandemwiththatoftheUSGermany.AsUSandGermanyexperiencesaslowdownintheirgrowthandmovesintoarecessionin2009,ChinaandIndia’sgrowthratesdeclinedaswell.(b)Withreferencetothedata,explainwhythechangesin[4]unemploymentratesdifferfromcountrytocountry.Possiblereasons:Extentoftheslowdownintheeconomyisonepossiblereasonaccountingforthevariationinthechangesintheunemploymentratesbetweencountries.E.g.USeconomycontracted,therebyleadingtoamoresignificantdeclineindemandforlabourandriseinunemploymentwhilethoseofothereconomieslikeChinaandIndia,arestillgrowing,thoughataslowerrateDegreeofflexibilityofthelabourmarketisanotherfactoraccountingforthevariationinthechangesintheunemploymentrates.Forinstance,GermanydidnotexperienceariseinunemploymentthoughithadsimilarlyexperiencednegativegrowthliketheUSin2009asitslabourmarketswasmorerigid,henceitsdemandforlabourdidnotfallassignificantlyasthefallinoutput.(c)Explainwhygovernmentsshouldcuttheir“spendingonkeeping[4]peopleinoldjobs”.Spendingonkeepingpeopleinoldjobsisappropriateiftheobjectiveistominimizecyclicalunemployment.AshighlightedinExtract2theoldjobsmightnolongerbeinexistenceevenastheeconomyrecoversandthisformofspendingwillinevitablyplaceaburdenonthegovernment’sbudgetinthelongterm.Governmentsshouldcuttheirspendingonkeepingworkersinjobsthatarenolongerrequiredandfocustheirspendingonrestructuringtheireconomiesandprovidingtrainingtoequiptheworkerswithanewsetofskillstoadapttothechangingdemandsoftheireconomies.Morebeneficialinenhancingproductivecapacityoftheeconomyandthuseconomicgrowthinthelongrun(d)Discusstheextenttowhichglobalcurrentaccountimbalancesare[8]theresultof“thesurpluscountries’inflexibleexchangerate