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Tuesday, February 20, 2007
So i was thinking the other day about the effect Chinese New Year, specifically the angpao giving has on the economy! With use of the multiplier effect, let's take a look! --------------------------------------------------------------------------------------------------- During CNY, parents give youths and children lots of angpaos with money, therefore increasing their wealth. As wealth is a component of the Consumption function, C Increases! (because we all love to spend more when we have more money) As Aggregate Expenditure (AE) is made out of C+I+G+(X-M), an increase in consumption will therefore lead to an increase in AE! (Insert Keynesian graph here) This increase in AE leads to an excess in Demand, which prompts firms to employ more factors of production, such as labour! Therefore National Income increases, and Unemployment rate drops. Cool shit! HOWEVER, the money doesn't come from nowhere. Our parents' real wealth actually decreases over the Chinese New Year, which willl lead to a reverse in the above process. But the effect isn't actually balanced out. Because our Marginal Propensity to Consume (MPC) is more than that of our parents, (this arises from the fact that we have more needs than them since they're richer, MPCpoor > MPCrich remember?) the overall effect on National Income is actually an increase. In numerical terms, if our parents gave us a $100 for angpao, we'd probably spend about $80 of it (MPC = 0.8), but if they kept it for themselves, they'd probably only spend maybe $60! (MPC=0.6) Therefore there will be an overall increase in National Income! Edit : Xinrui brought up the point that the angpao money that adults give may not actually be from their additional Income. They could actually be taking the money that they give out from their own savings, rather than using their additional Income to give out. So... They wouldn't really reduce Consumption. Either way, the same effect is achieved. Hence i conclude that to help the economy, parents should give their children more angpao money. ------------------------------------------------------------------------------------------------- Damn i'm good. posted by Moca at 11:19 AM Wednesday, February 14, 2007 There arn't alot of nice words that start with 'V' ... And Valentine's still isn't one of them. But thanks to you girls it gave me a slightly nicer impression of the whole event. I still think it's silly, but the expressions of friendship were very appreciated. And in a period that left me slightly more cynical than usual, you could say it came at just the right time. And to tell the truth, i enjoyed baking the brownies yesterday at Weiren's, not the baking part but more because of the whole spirit of it. That's what Valentine's is about, i think. ... And now to end of in style with a cool quote, that might be familiar to some of you all (or at least one) : Friendship is not necessary, like philosophy, like art... it has not survival value; rather it is one of those things that give value to survival - C.S. Lewis So Thank you all, again. And Happy Valentine's Day. On a side note to Grace (if she comes here) : I think the offer for dinner wasn't as much a joke as I thought it was. Haha. As in... I really wouldn't have minded, in a friend kind of way, of course. Ah well, another time, perhaps. posted by Moca at 8:43 PM Friday, February 02, 2007 i'm happy, im happy, and i love you all!!! wahahahahahahaa..... RACH'S COMPUTER IS REVAMPED AND BACK IN ACTION!!! *whoops* ok now i'm sleepy, so i'm going to bed, byebye ^^ posted by krayle at 10:54 PM |
    
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