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Individual saving (relate this to lvl of thrift) is collectively harmful…

- - - - lvl of thrift can be inferred from mps
        
        higher lvl of thrift, higher mps
        
        give an eg: a thrifty individual might save 0.5 for every inrease in income by 1 dollar, less thrifty individual will save 0.20 for every 1 dollar increase in income
        
        explain the multiplier effect in the context of the multiplier
        
        explain what happens with a higher lvl of thrift and thus lower consumption
        
        EV:
        
        higher lvl of thrift is not always damaging to the economy
        
        savings can be chanelled to towards investment
        
        investment helps to raise the country's productive capcity in the LR (talking about how firms are trying to save)
        
        lvl of thrift depends largely on the country's attitudes towards thrift and how comprehensive the country's social security system is
      - lvl of thrift also depends on economic outlook
        
        when economic outlook is bleak
        
        people are more thriftier
        
        reduce C, investors hold back I
        
        economic outlook affect lvl of thrift which limit effectiveness of pp
    - - size of mpm
        
        larger mpm and mpt implies smaller k
        
        reduce the effectiveness of pp
        
        eg: economy with heavy reliance on imports have larger mpm, economy with CIT and PIT has larger mpt
        
        hence rise in NY will be smaller compared to other economies with larger k
        
        EV: compare current vs past
        in our globalised world, it is likely that mpm would greatly affect economies compared to in the past where countries engaged in fewer exports and imports
      - amt and duration of tax cuts
        
        tax cuts can enourgae increase in C and I theoretically
        
        but if investors and consumers feel that the tax cuts are temporary or taxes raised next tiem
        
        hold back spending
        
        no substantial increase in NY
      - amt of increase in govt spending and how it is funded
        
        increase in govt spending is likely to be more effective than tax cuts because it would definitely have an impact
        
        hence govts should be prepared to increase spending by a substantial amount rather than relying on tax cuts
        
        if govt needs to borrow to fund their spending, then they risk crowding out effect
        
        explain crowding effect
        
        EV:
        
        countries that do not need to borrow do not need to worry about crowing out effect, thus raising the effectiveness of pp
        
        however, it ultimately depends on the country, eg even though sg might not be that affected by crowding out effect, the effectiveness of pp is debatable given the high import leakage