Thursday, June 5, 2008

Fastest time?

It was a dark stormy night… A group of 5 friends was trapped on Hill A full of wild, crazy animals… They had no idea when the beasts will attack them… With a lamp that can only last for 30 seconds, they must move over to Hill B for safety... Unfortunately, the tree branch that linked the 2 hills together can only support 2 people at a time… Once they crossed over, 1 guy definitely had to bring over the lamp to the Hill A…

And of course, different people have different weight therefore; it will take them different timing to travel across… Guy A, the fastest guy needs only 1 second, Guy B needs 3 seconds, Guy C needs 6 seconds, Guy D needs 8 seconds, and Guy E need 12 seconds.

Example, if Guy E and Guy A move across to Hill B as a pair, it will take them 12 seconds.. And certainly, we will get the fastest to move back to Hill A to bring the lamp over.. So total, they had used up 13 seconds... Okie, here comes the question, "Which guy is more handsome in the picture?"
HAHAHA...
Kidding!! Can u move all the guys over within 30 seconds?

Wednesday, June 4, 2008

The Multiplier Effect















Y= C + S where Y=Income, C = Consumption, S= Saving

AE = Y = C + I + G + (X-M)

C= function(Y), therefore, C= a + by

Lets take some figures to get a better understanding of this effect.

Assume that C= 10 + 0.8Y, I= 10, G= 10, (X-M)= 5

Y = C + I + G + (X-M); lets plot it in.
Y = 10 + 0.8Y + 10 + 10 + 5
Y = 0.8Y + 35
Y = 175

Imagine that Goverment wants to build more schools, G increases by 2.5;
Again take Y = C + I + G + (X-M);
This time round, G instead of 10, now become 12.5;

Lets see what happened.

Y = 10 + 0.8Y + 10 + 12.5 + 5
Y = 0.8Y + 37.5
Y = 187.5

Calculating the growth rate, (187.5-175)/175 X 100% = 7%


In layman's terms, when the Goverment wants to build more schools, they will outsource the jobs to different companies. Similarly, companies will need to hire more employees to get the job done fast. At the same time, they will purchase raw material from different companies as well. This goes on and on and this is called the multiplier effect.