Simple question... My Economics teacher says that if the National expenditure in a closed economy C + S is=100, L= 20, C= 80 the multiplier (1/MRL) is 5 (1/0.2)... then total output ( National Expenditure, The Arrow on the left of the CFI) Would rise to 125 from 100... How? Cos I would have presumed that the increase would be 1/5 of Output + total Output which would = 120... not 125?Sorry for my abysmal vocalisation of my problem... If anybody can explain, it would be a huge blessing?!?!?! :)
i think i'm in love with you ; ) thank you so much for everything.. you have supplied without demanding any price.. you are inelastic haha.. i will have only you to thank when i pass my exam tomorrow
Wow. Professor Holden, get thee out of Greece, and to a school that will pay you what you are worth. You are an amazing communicator. Your ability to articulate complex economic concepts is simply stunning. Best wishes to you. JS.
why can't u be my college professor. THANK YOU MAN!!! i have a midterm in 2 hours and this is going to help so much!! helped me understand a lot!! thank you so much! you are amazing
Sir, I'd just like to say how much I'm adoring these videos... You've finally taught me bits of economics that I had no idea about beforehand. Hope to pass by easily on my IB exams next week, thanks !
good as usual for students listening well. no info really leaks away. Just watch your fillers as in 'er' etc. Although normal to us, they take the energy away from the students who're listening with rapt attention. Nice going.
You are the best mate, I understood that so much better than when my year 12 teacher explained it...Keep up the good work! Hopefully you can get me through university too.
Man, you are helpful. My exam is tomorrow and this has helped me cover a lot of fiscal policy. (ive got bad time management)... didn't finish revising all topics :(
@kolchicx Something crap will come up that i will forget everything about, but i think stuff like trading blocs protectionism and stuff will come up because it hasnt come up yet i think
I love you man...no homo tho. You've just taught me more AS Macroeconomics in one day, then my teachers haS all year! I have an AS exam tomorrow, but I'm actually looking forward to it! Thank You!! :D
thanks a bundle man, quick question.. why would the government want to reduce Aggregate Demand, as it would lead to a short term increase in unemployment?! but long term, wouldn't a reduced price, lead to increased consumption and therefore a possible long term increase in AD?
@lucky7skywalker a government probably wouldn't want to decrease aggregate demand, just slow it down... because there might be too much inflation. p.s. a change in price level will not cause a shift in demand, but an extension... governments can reduce ad by reducing spending/raising taxes which might be because they are in debt and need to pay it back. generally, they use monetary policy (interest rates) to interfere if inflation becomes too high.
tromeros! s' euxaristw gia ola ta video s. Exis tromeri metadotikotita k o tropos pou ta e3igis ine para poli katanoitos! Mou exis dosi elpides gia to test m avrio paraskevi! ;)
First, I love you videos! I am getting ready to graduate with an Econ degree and if I had had your videos, I think I would have a 4.0 G.P.A.! My problem with fiscal policy is that it really just changes the situation for the short run and in the long run there is an output max. Won't raising G spending ultimately lower investment because higher AD and less saving will increase the real interest rate and squeeze out private investment possibility.
@kwest0319 This is true. An expansionary fiscal policy (either through increasing G or lowering taxes in an attempt to increase C) and the resultant rightward shift of the AD curve will result in an increase in the quantity of real money demanded (assuming given quantity of nominal money). If we look at the money market (which determines RIR), the money demand curve will shift right and raise the real interest rate. A higher interest rate means two things - investment falls and net exports fall.
@kwest0319 This is known as 'crowding out' when it does occur. This line of thinking is what Monetarists would say when arguing with Keynesians about fiscal policy, and an expansionary fiscal policy raises interests rates and may result in crowding out, whereas an expansionary monetary policy (ie when the central bank increase the money supply) lowers interest rates and may stimulate investment and increase net exports.
I have an Economics exams this coming week. I already secured an A in my mid terms, and more confident to score an impressive A in the final thanks to your videos. My professor is good but you add me more value. You the best! Sir, please keep them coming...
These are some really good videos. My professor is really great, but he often goes out of context and tries to take too much in at the same time. This sort of breaks it down for me in a good way and helps me seperate the different effects from each other. Gj!
thank you so much! i have an AP Macroeconomics test tomorrow about AD/AS and fiscal policies! this definitely helped me get the picture! thanks again!
Economic books, endless lectures in macroeconomics, hours wasted because of misunderstandings... and then, ten minutes on you tube and i get it...Who said youtube was a wast of time...Thank you!
thank you so much!! everything seemed hard at first but when you explained it was very easy to understand! i wish all teachers could use your method of explaining!!
I love you for pisting these videos, I am writing a big (high school) assignment which counts for 2 final grades, this is a great intro to macro economics!
Thank you so much! This helped alot, however, I had one quesiton:
When the government chooses to raise C by introducing Tax Cuts, then how will the multiplier effect come in? Will it only affect the M (by increasing it)?
Also, how would there be a multiplier effect on a contractionary fiscal policy? By raising taxes, the consumption should go down, but the imports will go down too?
Essentially, the multiplier effect also goes for GDP as well? If one component of GDP increases then GDP increases as a multiple because people are spending the money that circulated from the original source....
Like many others I am a fan of your teaching methods, thank you for making your videos accessible.
Also... I have watched several of your videos...actually ... whenever I have a question or even a little doubt I specifically seek out your videos to get a clear and factful understanding of the topic. I have seen people (losers & idiots) critic your work... Please, please, please keep making videos and know that you are the best thing since slice bread! I agree with @Lykaah1 there are some of us that really need you... I need you! WE Need you... Keep up the GREAT WORK!
Isn't the phillips curve just completely wrong because of you know... stagflation?
Also doesn't the stimulus money go to pay chinese manufacturers not western workers (unless they are in the service sector). And if the consumers use the stimulus money then surely there is no multiplier effect as the only reason C has gone up because the money was transferred to them by G. AD is the same in the end as there has just been a transfer of wealth.
@bonfirejovi If you understand economic principles and the dynamics of the multiplier effect, then you will know that Pajholden has given a perfect explanation to a hitherto confusing topic. Please, if you feel he doesn't know what he is doing, don't come on in here to comment. You can make your own videos to educate others if you think he is wrong. People like you discourage others with altruistic nature. I have learnt a lot from him and his videos have been extremely helpful. Thank you.
@bonfirejovi 85% of the stimulus came in the form of tax breaks, so I'm not sure where you got that Chinese manufacturers nonsense.
If C increases and leads consumers to spend more, how is this NOT an increase in aggregate demand? I think you may have mixed up AD and GDP. The multiplier lies in the fact that the same stimulus dollar is spent in hundreds of separate transactions. And once AD has increased, this is incentive for businesses to increase output, reducing unemployment.
How can you not see how insane your Keynesian theories are? Why not simply increase G to 100trillion dollars! That's 100trillion dollars more money in the economy! We would all be rich!
Let me try and educate you. Any money that is spent by the government must ultimately originate from its citizens - tax now or tax later. This is money they can no longer invest themselves. Hence you are merely repeating the proven-false argument, that central-planning beats a free market.
@tothemax01 You Idiot. what about money flowing in from overseas, like credit services in the current account, that didn't come from citizens domestically? Tax isn't the only form on income.
@tothemax01 You increase G (run budget deficits) during a recession to stimulate the economy. You decrease it (run budget surpluses) during periods of growth to control inflation. It balances out. The entire point is to limit the wild swings that unfettered markets tend to have and keep things running near the baseline growth rate.
You're repeating the "supply-side" logic that nearly destroyed the economy.
@suckittrebek619 Regarding G, no that does not work, the government does not spend more productively than the free market, if it did the USSR would have been paradise. Japan has proven beautifully that it does not work. And no, G is never cut back in booms because of the nature of politicians. And no, I would I identify myself as a supply-side economist as soon as I would identify myself as a Keynesian (aka economic quack).
@suckittrebek619 Secondly, let me educate you about these unfettered markets. In such a market, the government does not control supply or demand of anything, and the interest rate of money is set by the market. To claim that a -2% real interest rate set by the US central bank (a central bank of course, being as free-market as a politburo) and gov-chartered Fannie Mae spewing out sub-prime loaning constitutes a free market and doesn't cause a real estate bubble (aka 'destroy economy') is madness.
Hello there, firstly i am a big fan, your video's are great.
I was just wonderint though in this video you talk about the multiplier effect through government spending and taxation. but can it also happen through investment and/or consumer spending for example?
@charlaugar yes you are right - any initial rise in AD (be it from government or investment for example) would lead to a multiplier effect. Thanks for getting in touch.
@pajholden You mention how difficult it is to predict the outcome of expansionary fiscal policy, would you say this is the same for contractionary policy?
@TrolleyPower Difficult to predict the negative multiplier effects. Time/impact/ implementation lag make this even more so. It is politically unpopular so impact on consumption and investment will be difficult to estimate. Consider the effect on income distribution and unemployment as the incentive to work is lower (higher taxes), on the other hand as Government spending(e.g welfare benefits) decreases it may act as an incentive encouraging people to work. This is just a few to mention.
To do with the multiplier effect though you mentioned government spending and taxation but is that the only way it could work through the government? or could it be the same through investment and/ consumer spending?
please how can we calculate the bank deposit multiplier for each period and knowing the monetary policy that the bank was pursuing from the table below? Date Applied rate 01/10/2009 8.0 % 01/07/2009 10.0 % 01/01/2009 12.0 % 01/01/2008 15.0 % 04/09/2003 16.5 % 26/12/2002 14.0 % 21/10/1992 10.0 % 16/10/1992 25.0 % 19/06/1992 24.0 % 03/02/1992 22.5 % 04/11/1991 20.0 % 04/10/1992 18.0 % 01/08/1991 16.0 % 20/12/1990 15.0 % 01/10/1990 12.0 %
effect logically entails we employ the broken window fallacy ad infinitum for infinite economic growth. Maybe you Keynesians should instead make your equation be C minus G. Gov't can't spend real money without the private sector suffering eventually. Finally, this is pure mercantilist nonsense. No ad hominem intended.
Output being below productive capacity in a laissez-faire system does not mean you should stimulate AD through fiscal policy. What the market is doing is saving current resoures for future production. The market has rationally made the decision that production in the future will be more valuable than consumption of those "underused" resources in the present.
2:00 Why are you still teaching the Phillips' Curve? It was falsified in the 1970s where you had stagflation.
My lecturers notes are extremely unclear and i find u a great help but woulfd u be able to explain the difference between a fiscal policy and a stabilisation policy???? thank you
I just wanted to say thank you...your post are helping me with this class. If you post future post, could you please add numbers so there is an order. Again, thank you very much, you explain them so well.
the diagram is wrong.... for macroeconomics you need average price level on the Y axis and Real output or Real GDP on the X axis.. and you're a teacher?
the diagram is wrong.... for macroeconomics you need average price level on the Y axis and Real output or Real GDP on the X axis.. and you're a teacher?
Hi Phil, please clarify one thing: will AD shift toward Yf create inflation or not? in your other video about keynesian vs monetarist you said it will not create inflation up to Yf, but here you say it will create inflation. which one is right?
Hi Phil, please clarify one thing: will AD shift toward full-employment level of output create inflation or not? in your other video about keynesian vs monetarist you said it will not create inflation up to fullemployment, but here you say it will create inflation. which one is right?
However, I am currently studying economics at Alevel and my teacher insists that cutting taxes shifts AS (and apparently the person who wrote the exams concurs). This happens because decreased taxes decrease real costs for firms which means they'll produce more.
Why is there such confusion over this? Can AS produce the multiplier?
However, I am currently studying economics at Alevel and my teacher insists that cutting taxes shifts AS (and apparently the person who wrote the exams concurs). This happens because decreased taxes decrease real costs for firms which means they'll produce more.
Why is there such confusion over this? Can AS produce the multiplier?
can someone verify the validity of this assumed multiplier? And how can assume a constant relationship between inflation and employment when you can find examples of stagflation and examples of high unemployment with high inflation. Just the assumption that your curves represent reality gives me trouble, but I can't get past the multiplier. Take that away and you can't increase AD because the government gets its money to spend in one area from a different area.
Which area does the government get the money FROM. Unless we are specific as to which area the government takes the money FROM, we cannot say the TAKING FROM dilutes the argument that the multiplier effect does take place with increased government spending. I say this because government can borrow from the public as well as from foreign countries besides having the ability to print (which is hardly an option in industrialized nations).
There's a very useful tool that gov'ts can use which processes all this complicated data and then provides the economy with the optimum amount of employment.
Its called a 'free market'. It appears organically when people are left alone to sort out their own affairs so there's no need for them to get involved and help 'solve' peoples economic difficulties.
Agreed with everyone! As a british student studying abroad it is really helpful giving example such as the NHS which i can relate to.. I am hoping to study economics next year at university, where did you go?
I'm using your videos for my GCSE economics revision and frankly a revision guide is a waste of money if I can just get your better explanations on You-tube! :)
Is that why we get bubbles in are economy? Goverment spending... I find it funny how every time goverment spends money in a certain area in the economy prices go up for example education healthcare and earlier houses.
in the income multiplier is (1/1-MPC), or, one divided by 1 minus the marginal propensity to consume. this could also be expressed as 1/MPS, because MPS+MPC always = 1. MPS stands for marginal propensity to save.
The TAX multiplier = -MPC/MPS, or, the negative value of the MPC over the MPS.
The income multiplier is ALWAYS stronger than the tax multiplier, therefore increasing government spending is always more effecting in increasing (or decreasing) AD
You left out that the Philip's Curve is only valid in the short run and real inflation is a purely monetary phenomenon. 2006 Nobel Prize winner Edmund Phelps showed this.
from now on you are my economic teacher !!!!
klaudia5kms 5 days ago
Suddenly my entire AS economics course makes sense!
cheesydalek 1 week ago
Wow. Phil Holden you are a demigod.
adijo123 3 weeks ago in playlist More videos from pajholden
I love how I understand everything and Im doing IGCSE :D
sarilacivertkanarya 1 month ago in playlist Uploaded videos
I love how you can explain something in 9 minutes better than my AP Econ teacher can in 2 hours.
TechGeek95 1 month ago
Simple question... My Economics teacher says that if the National expenditure in a closed economy C + S is=100, L= 20, C= 80 the multiplier (1/MRL) is 5 (1/0.2)... then total output ( National Expenditure, The Arrow on the left of the CFI) Would rise to 125 from 100... How? Cos I would have presumed that the increase would be 1/5 of Output + total Output which would = 120... not 125?Sorry for my abysmal vocalisation of my problem... If anybody can explain, it would be a huge blessing?!?!?! :)
JoeT3378 2 months ago
i think i'm in love with you ; ) thank you so much for everything.. you have supplied without demanding any price.. you are inelastic haha.. i will have only you to thank when i pass my exam tomorrow
sunshinekiara 2 months ago in playlist Economics A2 Globalization
THANK YOU SO MUCH!
toa4lyfe 2 months ago
Wow. Professor Holden, get thee out of Greece, and to a school that will pay you what you are worth. You are an amazing communicator. Your ability to articulate complex economic concepts is simply stunning. Best wishes to you. JS.
JamesinCalgary 2 months ago
why can't u be my college professor. THANK YOU MAN!!! i have a midterm in 2 hours and this is going to help so much!! helped me understand a lot!! thank you so much! you are amazing
StoneMountain64 3 months ago
Sir, I'd just like to say how much I'm adoring these videos... You've finally taught me bits of economics that I had no idea about beforehand. Hope to pass by easily on my IB exams next week, thanks !
itscharlottewhite 3 months ago
SIR I HAVE NO WORDS TO PRAISE YOU ........PLEASE KEEP ADDING VIDEOS ON SOME MORE TOPICS OF ECONOMICS........YOU ARE HELPING TO us (rural students).
BHARDWAJPSONI 3 months ago
Signed in just to comment, favourite and subscribe to you. YOU'RE AWESOME! I depend on your videos to learn economics hahahah
annerockss 3 months ago
good as usual for students listening well. no info really leaks away. Just watch your fillers as in 'er' etc. Although normal to us, they take the energy away from the students who're listening with rapt attention. Nice going.
vikram1999ify 4 months ago
Great explanation sir.
Doc418 4 months ago
silly keynesian
shotsky94 5 months ago
You have a gift Mr Holden. Thank you for sharing it with us.
TanoInMelb 5 months ago
OMG UR GREEK??? WELL THEN, U SIR HAVE JUST GOTTEN URSELF A FAVOURITE ON SOME OF UR VIDS AND LIKES ASWELL AS A SUBBSCRIPTION. nice vid btw
mrh3tic 5 months ago
thanks great vid, but is AD always equal to GDP?
mamba1066 5 months ago
You are the best mate, I understood that so much better than when my year 12 teacher explained it...Keep up the good work! Hopefully you can get me through university too.
Gunnerss09 6 months ago
Man, you are so wonderful! You make this so interesting and so much fun!
navigatro 6 months ago
sir you r amazing ,,u r much better than my stupid tutor ,thank's a lot ,ur students must be lucky :) hope u were my teacher !
SyriansLuvSaddam 6 months ago
thanks a lot fot this video helped my out a lot
WhiteKnightDubstep 7 months ago
Brilliant like all your other videos. If you're ever looking for work, please move to Australia.
TanoInMelb 7 months ago
after watching this.....AQA's got nothing on my baby!
kolchicx 7 months ago
Man, you are helpful. My exam is tomorrow and this has helped me cover a lot of fiscal policy. (ive got bad time management)... didn't finish revising all topics :(
kolchicx 7 months ago
I have my final economics paper tomorow Unit 4, i need a C overall to be accepted in University, this guy has been like GOD, cheers
Supplementreviewdude 7 months ago
@Supplementreviewdude looks like we are in the same position. Would love a question on fiscal policy tomorrow.
kolchicx 7 months ago
@kolchicx Something crap will come up that i will forget everything about, but i think stuff like trading blocs protectionism and stuff will come up because it hasnt come up yet i think
Supplementreviewdude 7 months ago
@Supplementreviewdude oh shit. I'll be screwed either way. All the best xx
kolchicx 7 months ago
@kolchicx Ahh cant say i really enjoyed that, did you do edexcel?
Supplementreviewdude 7 months ago
THIS WAS SO HELPFUL THANK YOU
lpfann 7 months ago
HAVE MY BABIES PAJ! =D
heinzz93 7 months ago
"Exactly that point where they want to"
Who can they know where that exact point is in the first place... very VERY theoretical
SirithHeruwen 8 months ago
@SirithHeruwen eco IS very very theoretical. its full of models.
CLnomnom 8 months ago
I love you man...no homo tho. You've just taught me more AS Macroeconomics in one day, then my teachers haS all year! I have an AS exam tomorrow, but I'm actually looking forward to it! Thank You!! :D
raja1994 8 months ago
A day before my exam, you've taught me more than my teacher has in a year!
charliepee01 8 months ago 23
This has been flagged as spam show
i love you man!
Tferaboli 8 months ago
i love you man!
Tferaboli 8 months ago
apw tous pio eksipnous ellhnes eisai euxaristw para polh gia th boi8eia!!
redbullclock 8 months ago
I have learnt more in two of your videos than I have in about 6 economics lessons. Very good going.
Noyce547 8 months ago
This is brilliant. I have a Unit 2 macroeconomics exam on Friday and these videos have really helped add a sense of clarity. Thanks a lot :D
foreseenprophecies 8 months ago
thanks a bundle man, quick question.. why would the government want to reduce Aggregate Demand, as it would lead to a short term increase in unemployment?! but long term, wouldn't a reduced price, lead to increased consumption and therefore a possible long term increase in AD?
thanks alot man :)
lucky7skywalker 8 months ago
@lucky7skywalker a government probably wouldn't want to decrease aggregate demand, just slow it down... because there might be too much inflation. p.s. a change in price level will not cause a shift in demand, but an extension... governments can reduce ad by reducing spending/raising taxes which might be because they are in debt and need to pay it back. generally, they use monetary policy (interest rates) to interfere if inflation becomes too high.
RusNad 8 months ago
Light bulb just turned on in my head! Thanks a lot this is great!
Redcoat2806 8 months ago
tromeros! s' euxaristw gia ola ta video s. Exis tromeri metadotikotita k o tropos pou ta e3igis ine para poli katanoitos! Mou exis dosi elpides gia to test m avrio paraskevi! ;)
Keep up the good work!
CreatureCk 8 months ago
oh you are a life saver! you're making macroeconomics so much easier for a economics-challanged student like myself. thankyou thankyou thankyou
soooophieeee1 8 months ago
You sir, are the Feynman of Economics!
Thanks. I shall hope to pass my exam with flying colours with your videos this week!
123conundrum 8 months ago 19
@123conundrum That is the nicest (though undesreved) compliment I have ever received! Thank you so much and best of luck with those exams. Phil.
pajholden 8 months ago 6
I Think I May Love You!!!
In a straight way of course.
Galileo0601 8 months ago
ib economics exam in 2 days - you are my hero.
pitchayaa 8 months ago
great video!
neilorourke71 8 months ago
ure amazing
saraahxhc 8 months ago
Awesome Awesome Awesome
lahori76 8 months ago
why aren't people like you my teachers.. all my teachers are BLEAH.
tgt184 8 months ago
löl_Í_fêÉl_sÓ_lonélÿ_töÐåÿ
BabeaaJulianio35 8 months ago
You make everything about economics sound so easy, have you done any videos on income expenditure model at all?
DBBTOV 9 months ago
Καλη συνεχεια! Τα βιντεακια σου με εχουν βοηθησει πολυ σε επαναληψεις
kotsaris87 9 months ago
@kotsaris87 efharisto file mou. Eimai eftihismenos me ola afta comments - kai dikia sou. Pou easai; Athina; Pou spoudasies;
pajholden 9 months ago 2
First, I love you videos! I am getting ready to graduate with an Econ degree and if I had had your videos, I think I would have a 4.0 G.P.A.! My problem with fiscal policy is that it really just changes the situation for the short run and in the long run there is an output max. Won't raising G spending ultimately lower investment because higher AD and less saving will increase the real interest rate and squeeze out private investment possibility.
kwest0319 9 months ago
@kwest0319 This is true. An expansionary fiscal policy (either through increasing G or lowering taxes in an attempt to increase C) and the resultant rightward shift of the AD curve will result in an increase in the quantity of real money demanded (assuming given quantity of nominal money). If we look at the money market (which determines RIR), the money demand curve will shift right and raise the real interest rate. A higher interest rate means two things - investment falls and net exports fall.
c0n0rH3aN3y 8 months ago
@kwest0319 This is known as 'crowding out' when it does occur. This line of thinking is what Monetarists would say when arguing with Keynesians about fiscal policy, and an expansionary fiscal policy raises interests rates and may result in crowding out, whereas an expansionary monetary policy (ie when the central bank increase the money supply) lowers interest rates and may stimulate investment and increase net exports.
c0n0rH3aN3y 8 months ago
the vedios finishes at a scary tyme...scary digits =)
MrAhmad747 9 months ago
i love at 4:00 where you start to say the multiplier effect - wait a second - okay this is what it says haaaa i love you paj!
smoke a zoot with me sometime and explain equilibriums to me
ShmuggyMcGee 9 months ago
thanks for saving me on my macro exam tomorrow.
3dwardcullen69 9 months ago
Inflation is commonly thought of as money chasing limited goods. However ,strictly speaking, inflation is caused by the increased costs of supply.
MrSmackdown100 10 months ago
I have an Economics exams this coming week. I already secured an A in my mid terms, and more confident to score an impressive A in the final thanks to your videos. My professor is good but you add me more value. You the best! Sir, please keep them coming...
ESTouray1 10 months ago
These are some really good videos. My professor is really great, but he often goes out of context and tries to take too much in at the same time. This sort of breaks it down for me in a good way and helps me seperate the different effects from each other. Gj!
damillionmalania 10 months ago
i like how you're smiling at the end =)
Metamorphisize 10 months ago
Thank you soooooo much!!! :D You are a lifesaver for all of us!! :d
ratchettie 10 months ago 4
I understood everything & didn't fall asleep! If only all lecturers could be so clear.
alic2431 11 months ago
Thanks! :)
strong3rtiger 11 months ago
thank you so much! i have an AP Macroeconomics test tomorrow about AD/AS and fiscal policies! this definitely helped me get the picture! thanks again!
IxAMxH4TR3D 11 months ago
Economic books, endless lectures in macroeconomics, hours wasted because of misunderstandings... and then, ten minutes on you tube and i get it...Who said youtube was a wast of time...Thank you!
mounkeniskunken 11 months ago
This has been flagged as spam show
If I want to start Macroeconomics from Scratch having a fair knowledge on Microeconomics, what is the flow of videos that must be viewed?
ankittrip 11 months ago
If I want to start Macroeconomics from Scratch having a fair knowledge on Microeconomics, what is the flow of videos that must be viewed?
ankittrip 11 months ago
Thank you so much :)
probasu 11 months ago
man...!!
yo so gr8...!! i've learnt so much... thanks a lot...
i got many on ma itouch...and even my friends tak a lot of help...:-)
love isac
SuperSacc 1 year ago
man...!!
yo so gr8...!! i've learnt so much... thanks a lot...
i got many on ma itouch...and even my friends tak a lot of help...:-)
love isac
SuperSacc 1 year ago
Real good lesson.Your are blessed with a real teaching skill!All the best to you from a collegeu in Sweden.
zsylvana 1 year ago
This is awesome.
Thanks a lot! :)
IriaMaiden 1 year ago
have you mad a video of monetary policy ? or supply side?
bigmangiff 1 year ago
thank you so much!! everything seemed hard at first but when you explained it was very easy to understand! i wish all teachers could use your method of explaining!!
Do you give Skype lessons?
mini1598 1 year ago
That was a bit easier to understand than my instructors method.
veryvalea1 1 year ago
YOu are genius !
bobichina 1 year ago
I love you for pisting these videos, I am writing a big (high school) assignment which counts for 2 final grades, this is a great intro to macro economics!
astridlamseben 1 year ago
Thank you so much! This helped alot, however, I had one quesiton:
When the government chooses to raise C by introducing Tax Cuts, then how will the multiplier effect come in? Will it only affect the M (by increasing it)?
Also, how would there be a multiplier effect on a contractionary fiscal policy? By raising taxes, the consumption should go down, but the imports will go down too?
And what effects are seen on the currency?
Thanks in advance.
V. Jain
vishaljain12 1 year ago
Essentially, the multiplier effect also goes for GDP as well? If one component of GDP increases then GDP increases as a multiple because people are spending the money that circulated from the original source....
Like many others I am a fan of your teaching methods, thank you for making your videos accessible.
NJW3 1 year ago
thanks a lot. i understand economics in much better way.thanks a lot............
gopikrishnangr 1 year ago
thanks a lot. i understand economics in much better way.thanks a lot............
gopikrishnangr 1 year ago
Also... I have watched several of your videos...actually ... whenever I have a question or even a little doubt I specifically seek out your videos to get a clear and factful understanding of the topic. I have seen people (losers & idiots) critic your work... Please, please, please keep making videos and know that you are the best thing since slice bread! I agree with @Lykaah1 there are some of us that really need you... I need you! WE Need you... Keep up the GREAT WORK!
TequinaSoliz 1 year ago
You know your a really great professor! Your the reason I am passing my Macroeconomics course right now... Thank you soooo much!
TequinaSoliz 1 year ago
Thank you for posting this!
Smartangel1989 1 year ago
this video was very helpful and informative...thank you
AJ410 1 year ago
Thank you for the good work. Please keep making videos to help people in need because you are a blessing to some of us. God bless.
Lykaah1 1 year ago
this is brilliant .. thank you !
blazemk 1 year ago
Isn't the phillips curve just completely wrong because of you know... stagflation?
Also doesn't the stimulus money go to pay chinese manufacturers not western workers (unless they are in the service sector). And if the consumers use the stimulus money then surely there is no multiplier effect as the only reason C has gone up because the money was transferred to them by G. AD is the same in the end as there has just been a transfer of wealth.
bonfirejovi 1 year ago
@bonfirejovi If you understand economic principles and the dynamics of the multiplier effect, then you will know that Pajholden has given a perfect explanation to a hitherto confusing topic. Please, if you feel he doesn't know what he is doing, don't come on in here to comment. You can make your own videos to educate others if you think he is wrong. People like you discourage others with altruistic nature. I have learnt a lot from him and his videos have been extremely helpful. Thank you.
Lykaah1 1 year ago
@bonfirejovi 85% of the stimulus came in the form of tax breaks, so I'm not sure where you got that Chinese manufacturers nonsense.
If C increases and leads consumers to spend more, how is this NOT an increase in aggregate demand? I think you may have mixed up AD and GDP. The multiplier lies in the fact that the same stimulus dollar is spent in hundreds of separate transactions. And once AD has increased, this is incentive for businesses to increase output, reducing unemployment.
suckittrebek619 1 year ago
How can you not see how insane your Keynesian theories are? Why not simply increase G to 100trillion dollars! That's 100trillion dollars more money in the economy! We would all be rich!
Let me try and educate you. Any money that is spent by the government must ultimately originate from its citizens - tax now or tax later. This is money they can no longer invest themselves. Hence you are merely repeating the proven-false argument, that central-planning beats a free market.
tothemax01 1 year ago
@tothemax01 You Idiot. what about money flowing in from overseas, like credit services in the current account, that didn't come from citizens domestically? Tax isn't the only form on income.
123givsey 1 year ago
@tothemax01 You increase G (run budget deficits) during a recession to stimulate the economy. You decrease it (run budget surpluses) during periods of growth to control inflation. It balances out. The entire point is to limit the wild swings that unfettered markets tend to have and keep things running near the baseline growth rate.
You're repeating the "supply-side" logic that nearly destroyed the economy.
suckittrebek619 1 year ago
@suckittrebek619 Regarding G, no that does not work, the government does not spend more productively than the free market, if it did the USSR would have been paradise. Japan has proven beautifully that it does not work. And no, G is never cut back in booms because of the nature of politicians. And no, I would I identify myself as a supply-side economist as soon as I would identify myself as a Keynesian (aka economic quack).
tothemax01 1 year ago
@suckittrebek619 Secondly, let me educate you about these unfettered markets. In such a market, the government does not control supply or demand of anything, and the interest rate of money is set by the market. To claim that a -2% real interest rate set by the US central bank (a central bank of course, being as free-market as a politburo) and gov-chartered Fannie Mae spewing out sub-prime loaning constitutes a free market and doesn't cause a real estate bubble (aka 'destroy economy') is madness.
tothemax01 1 year ago
awesome video :) watching a video like this every week is better than two hours with my economics teacher haha
charlie398 1 year ago
Hello there, firstly i am a big fan, your video's are great.
I was just wonderint though in this video you talk about the multiplier effect through government spending and taxation. but can it also happen through investment and/or consumer spending for example?
Please and thankyou :)
charlaugar 1 year ago
@charlaugar yes you are right - any initial rise in AD (be it from government or investment for example) would lead to a multiplier effect. Thanks for getting in touch.
pajholden 1 year ago
@pajholden You mention how difficult it is to predict the outcome of expansionary fiscal policy, would you say this is the same for contractionary policy?
TrolleyPower 8 months ago
@TrolleyPower Difficult to predict the negative multiplier effects. Time/impact/ implementation lag make this even more so. It is politically unpopular so impact on consumption and investment will be difficult to estimate. Consider the effect on income distribution and unemployment as the incentive to work is lower (higher taxes), on the other hand as Government spending(e.g welfare benefits) decreases it may act as an incentive encouraging people to work. This is just a few to mention.
iycepuff 8 months ago
Hello there,
Firstly i am a big fan! your videoes are great.
To do with the multiplier effect though you mentioned government spending and taxation but is that the only way it could work through the government? or could it be the same through investment and/ consumer spending?
charlaugar 1 year ago
This has been flagged as spam show
well done Phil,
can I get a copy of yr tutes?? they pretty easier to understand as in my Uni lectures.
cheers
amerang89@gmail.com
MrAMerang 1 year ago
great one@!!
iPekz1990 1 year ago
these videos help me to understand when my professor does not!
CMAC35B 1 year ago
jihanemarwa 1 year ago
You are my savior！！！
carlcheung4 1 year ago
YOU ARE A GENIUS!!!
I got a 32 on my last Economics test.
But your videos are helping so hopefully I will pass my 2nd test tomorrow. =)
ooxena 1 year ago
effect logically entails we employ the broken window fallacy ad infinitum for infinite economic growth. Maybe you Keynesians should instead make your equation be C minus G. Gov't can't spend real money without the private sector suffering eventually. Finally, this is pure mercantilist nonsense. No ad hominem intended.
selfrealizedexile 1 year ago
Output being below productive capacity in a laissez-faire system does not mean you should stimulate AD through fiscal policy. What the market is doing is saving current resoures for future production. The market has rationally made the decision that production in the future will be more valuable than consumption of those "underused" resources in the present.
2:00 Why are you still teaching the Phillips' Curve? It was falsified in the 1970s where you had stagflation.
5:40 The multiplier
selfrealizedexile 1 year ago
My lecturers notes are extremely unclear and i find u a great help but woulfd u be able to explain the difference between a fiscal policy and a stabilisation policy???? thank you
Ballymurn04jjj 1 year ago
How is it that your Long Run Supply Curve (LRAS) is NOT vertical?
ShanilROX 1 year ago
@ShanilROX yeah i was wondering the same thing! weird huh
rosenstones 1 year ago
@ShanilROX watch his video on monetarist vs keynesian theory. its a different graph
deathcage 1 year ago
I just wanted to say thank you...your post are helping me with this class. If you post future post, could you please add numbers so there is an order. Again, thank you very much, you explain them so well.
Sheen357 1 year ago
good job
alexcahit 1 year ago
brilliant lesson, I have been trying to understand the multiplier effect for almost a year
jutso19 1 year ago
You've just taught a 2hour economics lesson in under 10mins. Genius!
jammaster01 1 year ago 51
@jammaster01 Isn't that amazing! And it's free :-)
alic2431 11 months ago
@jammaster01 yes, great lecture just google fet system and there are some good revision notes there
umarkhan4999 10 months ago
thanks man, you just taught me more than my economics teacher ever did :D
al119280 1 year ago
i love the vid, i'm having an economy exam in 40 minutes (the big one on the end of a semester)
i wished i found this two weeks earlier :(
LorysFan 1 year ago
Paj I have my economics AS level exam in 2 days and you have helped me so much! Thanks very much, it actually makes sense now!
HollyFogg 1 year ago
Excellent video, very clear and helpful. Cheers
torres444 1 year ago
ur a legend mayte
barcelona4life1991 1 year ago 14
Another great video.
Although, doesn't fiscal policy also affect AS?
xCHibiiEverlastingx 1 year ago
5:57 to 6:30
Broken window fallacy.
DystopianUtopia 1 year ago
Like :D
randomrainbow17 1 year ago
the diagram is wrong.... for macroeconomics you need average price level on the Y axis and Real output or Real GDP on the X axis.. and you're a teacher?
but appart from that... good explanation!
paco315 1 year ago
@paco315 thats exactly how he did it
amw03 1 year ago
the diagram is wrong.... for macroeconomics you need average price level on the Y axis and Real output or Real GDP on the X axis.. and you're a teacher?
paco315 1 year ago
i just loved the way you explain everything, thanx
siameh02 1 year ago
You deserve an OBE
iWishMyNameWasBetter 1 year ago 2
Hi Phil, please clarify one thing: will AD shift toward Yf create inflation or not? in your other video about keynesian vs monetarist you said it will not create inflation up to Yf, but here you say it will create inflation. which one is right?
asephidayatful 1 year ago
@asephidayatful Demand pull inflation, when demand exceeds supply correct ? so When AD keeps increaing even on the LRAS curve thus raising prices,
manutd4lyfeblad 1 year ago
Hi Phil, please clarify one thing: will AD shift toward full-employment level of output create inflation or not? in your other video about keynesian vs monetarist you said it will not create inflation up to fullemployment, but here you say it will create inflation. which one is right?
asephidayatful 1 year ago
So if we increase government spending we increase unconstitutional policies, or in other words, we increase tyranny?
SadegoGG 1 year ago
You explain things incredibly well!
However, I am currently studying economics at Alevel and my teacher insists that cutting taxes shifts AS (and apparently the person who wrote the exams concurs). This happens because decreased taxes decrease real costs for firms which means they'll produce more.
Why is there such confusion over this? Can AS produce the multiplier?
rachbrad123 1 year ago
@rachbrad123
he's talking about income taxes. your teacher was refering to, i think, corporate tax or tax to the firms
GaiaGoddessOfEarth 1 year ago
You explain things incredibly well!
However, I am currently studying economics at Alevel and my teacher insists that cutting taxes shifts AS (and apparently the person who wrote the exams concurs). This happens because decreased taxes decrease real costs for firms which means they'll produce more.
Why is there such confusion over this? Can AS produce the multiplier?
rachbrad123 1 year ago
Amazing teacher.
QwertyNiji 1 year ago
thankyou, so much easier to understand than my lecturers
2scotland1 1 year ago
you are the best!!! thank you sooo much!!! :)
Ramonalle 1 year ago
Thank you so much from So. California!!! This helped me prepare for my test in macroeconomics! : )
desertbaby09 1 year ago
big up this guy, hes on facebook, go search his name and show some support!!!
yuenj01 1 year ago
Thanks a lot ...!
Great Video !!! :)
sauravkalra 1 year ago
Legend!
fuitzC 1 year ago
can someone verify the validity of this assumed multiplier? And how can assume a constant relationship between inflation and employment when you can find examples of stagflation and examples of high unemployment with high inflation. Just the assumption that your curves represent reality gives me trouble, but I can't get past the multiplier. Take that away and you can't increase AD because the government gets its money to spend in one area from a different area.
razerfish 1 year ago
@razerfish
Which area does the government get the money FROM. Unless we are specific as to which area the government takes the money FROM, we cannot say the TAKING FROM dilutes the argument that the multiplier effect does take place with increased government spending. I say this because government can borrow from the public as well as from foreign countries besides having the ability to print (which is hardly an option in industrialized nations).
Katebebe1 1 year ago
Thanks so much for these videos! You're so much easier to understand than my teacher!
Skater9000 1 year ago
its great you put your time into doin this for people :) great teacher and great videos, they have helped me more then you can imagin
timturnnips 1 year ago
thank you so much for the lesson :)
rosiecao 1 year ago
great video
i lol'd at the awkward ending.
rohit91 1 year ago
There's a very useful tool that gov'ts can use which processes all this complicated data and then provides the economy with the optimum amount of employment.
Its called a 'free market'. It appears organically when people are left alone to sort out their own affairs so there's no need for them to get involved and help 'solve' peoples economic difficulties.
cookdave 1 year ago
great video.........thanks
pujadon 1 year ago
your videos have been really usefull for my A.S's thanks
tommysgotamonkey 1 year ago
Perfect and easy to understand!
GTDyno 1 year ago
thank you! you are a great professor!!
jcise 1 year ago
Agreed with everyone! As a british student studying abroad it is really helpful giving example such as the NHS which i can relate to.. I am hoping to study economics next year at university, where did you go?
hillbilly229 1 year ago
I'm using your videos for my GCSE economics revision and frankly a revision guide is a waste of money if I can just get your better explanations on You-tube! :)
shan0161 1 year ago
awesome, great for revision :) this is gonna be useful for my upcoming IB exams
xhappyberryx 1 year ago 23
Great lecture!!
Greetings from Vancouver, Canada
Home of the 2010 Olympics
vancanone 1 year ago
you're great.
bluhmfeld 2 years ago
Is that why we get bubbles in are economy? Goverment spending... I find it funny how every time goverment spends money in a certain area in the economy prices go up for example education healthcare and earlier houses.
totempoll27 2 years ago
@totempoll27
bubbles are formed by fiscal and monetary policy that are both too expansionary, and reckless. if you live in the states youll know what i mean.
cptamerica011 1 year ago
what is the formulae of multiplier effect
MrSweetchoklet 2 years ago
The formula used to figure the multiplier is...change in real GDP divided by the initial change in spending.
grrillawar 2 years ago
@MrSweetchoklet
in the income multiplier is (1/1-MPC), or, one divided by 1 minus the marginal propensity to consume. this could also be expressed as 1/MPS, because MPS+MPC always = 1. MPS stands for marginal propensity to save.
The TAX multiplier = -MPC/MPS, or, the negative value of the MPC over the MPS.
The income multiplier is ALWAYS stronger than the tax multiplier, therefore increasing government spending is always more effecting in increasing (or decreasing) AD
cptamerica011 1 year ago
if the government spends money, it should give it to poorer people, because the poor spend a higher % of there income than the rich (doctors).
9lade 2 years ago
Thank you for your great explanations! You make it much simpler to understand.
thostrup16 2 years ago
You left out that the Philip's Curve is only valid in the short run and real inflation is a purely monetary phenomenon. 2006 Nobel Prize winner Edmund Phelps showed this.
joshb6206 2 years ago