Today has been another long day. My mama kind of reminded of the past couple of days when she told me not to study in school till late and that I should take a short break in between. Ironically, it was what she told me a long time back that made me want to study. She told us kids about how her friend had to force her son to go out of his room just to have his meals coz he was too busy studying in his room. In other words, it was her way of telling us to at least be half as hard working as him.
And now you know where i get my read-between-the-lines skill. Haha!
Spent 8 hours on a single economics lecture -- Short run economic fluctuations. Ie. why aggregate demand curve is downward sloping, causes of economic fluctuation, the influence of monetary and fiscal policies on the aggregate demand and the list just goes on. (To be exact, 1 and a half drawing block required with my cute and small handwriting)
8 hours is indeed a long time considering the number of subjects i still need to catch up on. However, im pretty glad i got it over with coz really, it made me feel "god-like" -- thought it was just during the moments when i managed to expl confusing parts to my friends. If there's to be a turning point in my uni life, tonight would be it. I didnt forget to be more grateful and less cocky.
However, when i got back, I noticed the utilities bill increase by about 60%. Ouch! Lucky there's some sort of Gvt intervention in the form of rebates. Total amount payale was halved. Mama couldnt understand why there's price increase as well as subsidies at the same time. And she asked why couldnt prices remain and eliminate all the subsidies nonsense.
After all that studying and boosting of my morale, I was brought back down to earth.
Hmm....let me give it a try.
One of the causes of economic fluctuations/ recession is a leftward shift of the aggregate demand for goods and services. ie. A decrease in consumption by households and firms. This will reduce the GDP of a country.Let me see if i can convince Dear Mama with my theory. Gotta tell her that her question kept me awake for half the night, and Man United will be keeping me awake for the next half.
GDP = (Consumption- Tax) + Investment + (Tax + Government Net Earnings) + Net Exports
By imposing a tax/tariff on energy consumption, households and firms are now required to pay more for the same quantity of electricity consumed in order to offset the decrease in consumption. However, this will lead to a further decrease in consumption as some consumers are less willing to pay a higher amount for the same qty of electricity consumed. Take note that the demand for electricity is price inelastic as electricity is an integral part of our lives. Therefore to offset a further decrease, if any, subsidies and rebates have to be implemented.
Rebates and subsidies vary inversely with income levels -- the higher ur income, the lower the subsidies, the more tax you pay and vice versa. The lower income families will maintain consumption -- under the perception that they will enjoy subsidies and rebates during certain months of the year. In other words, the bulk of the tax will come from the rich, the rest coming from the tax paid by lower income groups on months where there's no rebates.
Taxes generated as well as other monetary and fiscal policies implemented by the Government will increase, if not, maintain, if not, minimize the fall in GDP. Therefore, a tax on electricity during a recession is in fact the way to go!
On a sidenote, both my brothers are having fever and I have this feeling mum will be next coz she's looking after them. If she catches the virus, who'll look after me?