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The slowdown of the global economy has caused many governments to consider…

- - - - Thesis
        very similiar to pump priming explanation
        
        P:
        
        EFP involves increasing G and decreasing T
        
        E:
        
        explain what you can increase G on
        
        explain what you can increase T on
        
        E:
        
        singapore government has invested on infrastructure, eg the Thompson East-caost line in singapore
        
        this will cause an increase in AD from AD0 to AD1 and thus AD increases by a multiple (simliar to pump priming)
        
        explain the graph
        
        L: hence efp can be suitable for managing the economy
        
        DRAW GRAPH
      - Antithesis:
        
        there is poor economic outlook
        
        consumers and investors might not increase their consumption and investment even if there is a lower tax
        
        there might be crowding out effect
        
        if the government does not have enough money to fund its increase in G... (explain the rest of the crowing out effect)
        
        L: hence, it might not be effective
    - - Thesis
        
        with a depreciation/neutral stance
        
        px of M in FC decrease, px of I in DC increase...
        
        cont explaining the impact to cause an increase in X-M
        
        EV:
        
        because there is an economic slowdown, it is unlikely that a depreciation of the country's currency will increase by a large extent (because maybe pple from other countries also dont want to spend as much)
      - Antithesis:
        
        MLC might not hold
        
        PED of X and M might only be elastic in the LR but not in the SR (because the longer time you have the more likely your PED can change and thus be more flexible, you cannot be so flexible in the SR)
        
        there might also be imported inflation
        
        since the px of foreign exports become more expensive, the cop of singapore imports will increase
        
        sras shift up
        
        cost inflationary pressures
        
        DRAW GRAPH
  - - - draw out the graph with downward curving dd and vertical Ms
        
        E: Since there is little/no room for lowering interest rates, this policy is not effective
    - - P:
        
        if economic outlook in the economy is poor, consumers and investors might not increase spending even with lower i/r
        
        E:
        
        consumers and investor lack confidence in the economy
        
        they are less likely to take the risk to invest even with lower i/r
        
        C and I do not increase as much
        
        L:
        
        Government fails to use lower interest rates to carry out EMP
    - - if economic growth is caused by upwards shift in sras
        
        lowering interest rates is unlikely to resolve the problem
        
        instead it could lead to dd pull inflation
    - - P:
        
        Size of multiplier will determine the extent to which national income rise when AD rise
        
        E:
        
        multiplier = 1/ mpt +mpm + mps, when any of the components are large, then there is a small multiplier and thus a small impact on AD
        
        E:
        
        eg for singapore, we have a high mps because of our savings eg CPF, meaning that our K is lower and MP might not be that effective
        
        L:
        
        Hence our K is likely to be smaller and thus be less effective in changing NY compared to other countries with a larger multiplier