Singapore tightens foreign-worker restrictions To reduce reliance on overseas labor in the manufacturing sector, Singapore’s government is tightening its foreign-worker restrictions. With this policy, Singapore is losing its manufacturing capacity. Even though there have been more sales orders resulting from the economic recovery of other Southeast Asian countries, firms do not have enough manpower to produce.

Source: Bloomberg, 13 January 2014 Think about Singapore’s foreign-worker restrictions:

What is the effect of Singapore’s foreign-worker restrictions on aggregate supply and potential GDP?

What is the effect of the economic recovery of other Southeast Asian countries on Singapore’s economy?

How do Singapore’s real GDP and price level change as a result of these two events?