Aggregate Demand & Aggregate Supply

[ElevateState]

Thank you, this was excellent. Short and to the point.

[TheMrRDias]

You only explain the keynesian model.

[JoeT3378]

Fuck I hate Aggregate Supply. :S

[Kapaawarrior77]

I wish you are my econ teacher

[BrynJonesOnline]

This isn't to do with capitalism; this suggests a real need for an active government role in directing the economy; hardly free market capitalism writ large! Also it's a model; reality is far more complex!

[JokersAce0]

I remember when I learned this in my AP economics courses, that is when I realized the futility of capitalism.

[rmmalimet]

i like the way he says "demand" -- "demaund" :D

[abortionasiaCOCKROCK]

jeebus h. christ! i finally understand economics. in all seriousness though, this guy is really good.

[BrynJonesOnline]

We are both right. The price level represents the change in aggregate prices or prices in general and so is representative of inflation

[hundreddaysago1]

Umm shouldn't it be increase in general price level rather than increase in inflation since inflation is the rate of increase in price?

[BrynJonesOnline]

The answer is (a) as those are the labelks on the 2 axes

[ecceservices]

Ok, someone ask me this question: The model of aggregate demand and aggregate supply explains the relationship between

Question 11 answers a. real GDP and the price level. b. the price and quantity of a particular good. c. unemployment and output. d. wages and employment.

Which one is the swear?

[BrynJonesOnline]

If the costs of production increase, this doesn't alter the quantity or quality of the factors of production in an economy and so the maximum output won't change; it'll just cost more to produce any level of output and so the price level increases as firms push up prices to compensate for their higher costs of production

[BrynJonesOnline]

TheAnthonyhaber: AD shifts if one of the components of AD changes; eg if income taxes increase, C will decrease and so AD will decrease shifting the AD curve to the left.

AS will shift to the right if the economy has more factors of production or the factors of production become more productive. Hope this helps. Bryn

[TheAnthonyhaber]

how do you determine if the AD curve or the AS curve is the right one to shift?

[BARCA882]

the best part of this video is vince carter dunk over white guy. great stuff

[Fmlyguy1993]

Nice Video. Any chance you can make one about the graphs with average total cost, variable cost, etc? thanks.

[Romeowasbleeding1]

Thank you!

[locustsymphony]

This would be better if the camera was held static instead of the shaky-cam, zoom-in effect they're going for here. It's quite distracting. This is economics, not the Hurt Locker!

[ferrybreezy]

I should skip school and start watching your videos :>

[BrynJonesOnline]

Yes

[MyMrwrestling]

is this for your ocr AS level

[CursedDoom1]

thanks :)

[iBegToDiffer]

very helpful. thank you.

[arabeye]

Good!

[alfredoooddd]

fuck

[EyeAmTheIlluminati]

Price level does not represent inflation you idiot. Inflation is an increase in the money supply, which leads to price increases, but they are not the same thing. People like you are the reason we are in a deep recession.

[EyeAmTheIlluminati]

@bs2790 You are wrong. The expansion of the money supply precedes the increase in price level. Webster and Oxford dictionaries both correctly define inflation as an increase in currency or money, causing an increase in prices. The federal government has figured out clever ways to manipulate the CPI (such as "hedonics") to make it look like prices are not rising, which mildly distorts the effects of the Fed's expansion of the money supply

[EyeAmTheIlluminati]

@bs2790 Money supply growth does not tend to explain inflation, money supply growth IS inflation and just about any dictionary would define it as such. Most contemporary economic textbooks are grounded on Keynesian economic theory, which has proven time and again to be an uncredible theory. Just because Keynesians define inflation as an increase in prices does not mean that is the historical or correct definition of inflation. Keynesians have changed the definition

[EyeAmTheIlluminati]

@bs2790 I have already explained to you the problem with defining inflation as an increase in price level, but allow me to do it again. The CPI is the tool the government uses to measure price changes, or as you prefer to call "inflation", and it has been extremely vulnerable to political manipulation. For instance, food and energy are removed from the equation when calculating the CPI. It's a deliberate scam because commodity prices are the first thing to go up when the money supply expands

[EyeAmTheIlluminati]

@bs2790 By my definition an increase in the velocity of money would not be inflation? You are absolutely wrong, the velocity of money is determined by the rate of growth of the money supply, which I define as inflation. The problem with your "short run" Keynesian inflation theory, which usually blames weather for sudden increases in prices, is the fact that Keynesians ignore the effect of money growth in the long run. Once again, Keynesian economics is little more than government propaganda

[EyeAmTheIlluminati]

@bs2790 Btw, Core inflation is what both the Federal Reserve and U.S. Commerce Department use when prescribing fiscal and monetary policy. By removing food and energy (both inelastic goods for the average consumer) from the equation, the government and central bank are able to make the case for expanding the money supply. You agree with me that politicians are scumbags yet you endorse the very economic theory, Keynesianism, which empowers them to be completely corrupt

[EyeAmTheIlluminati]

@bs2790 I knew about Austrian economics way before I knew who Peter Schiff was. I just happened to like one of his videos because he is the only economist appearing on the financial networks to preach sanity. We have been in a recession for almost 4 years and it is not anywhere close to ending because of people like you, people who think that carrying out the same failed policies over and over will lead to a recovery. Congratulations on memorizing your college textbooks

[EyeAmTheIlluminati]

@bs2790 I have traded commodities and currencies for over 30 years. I know when to buy and when to sell because I wasn't trained in bullshit economics like you are being trained right now. I have actually made a living in the real economic world while you pretend to know more just because you memorized some useless theories out of a college texbook. I'll let you in on a secret: more of academia has never actually been exposed to the real world. They are living in a fantasy land.

[Jarrodmontelius]

@EyeAmTheIlluminati why do you think ur illuminati.

[EyeAmTheIlluminati]

@Jarrodmontelius Because I have connections with very important people, i.e. Bilderberg Group, Trilateral Commission, CFR, Skull and Bones, etc.

[Jarrodmontelius]

@EyeAmTheIlluminati enjoy having no soul, dumbass

[EyeAmTheIlluminati]

@Jarrodmontelius I enjoy the privileges of money and power, something you will never know

[Jarrodmontelius]

@EyeAmTheIlluminati I’m in school for pharmacy what do you do? Unless you actually are illuminati you will not make more than me and even if you do, I’ll be alright. Unless you know of some secret illuminati things coming my way lol. Do you get off putting others down? Strange you embrace being a bad person. Is Alex jones right about the illuminati, humor me…..

[EyeAmTheIlluminati]

@Jarrodmontelius Lol, Alex Jones is what we like to call "controlled opposition". He offers the illusion of being a "man of the people" when in fact he is good friends with the very people he pretends to demonize. Right now Charlie Sheen, a noted friend of Alex Jones, is willfully being used as a distraction to take the public's attention away from the collapsing economy. Food and energy prices are hyperinflating to record highs while the Federal Reserve says we are experiencing deflation, lol.

[Jarrodmontelius]

@EyeAmTheIlluminati The end result being.... A nwo? lower the population, by like 80%?

[EyeAmTheIlluminati]

@Jarrodmontelius The NWO stuff is misguided. They would never be so explicit about taking over. It's a gradual process of enslavement, much like boiling a frog. Over 99% of the value of the currency has been destroyed in the last 100 years. That's true enslavement, a pyramid scheme of money creation whereby a few insiders benefit at everyone else's expense. Inflation is the biggest scam ever perpetrated on humanity and economics departments around the country exist to justify central banking.

[Jarrodmontelius]

@EyeAmTheIlluminati the thing is all the nwo stuff has come true, and what is the point of having somone like alex jones exposing the truth? Your somone who knows about the illuminati, nothing more.

[EyeAmTheIlluminati]

@Jarrodmontelius What would be the point of me knowing anything more when the Illuminati pays me to troll on the internet all day? There are thousands like me who get paid to sit at our computers all day and investigate conspiracy theorists. It's really a dream job for anyone and pocket change for the illuminati members, so it's a win-win for us and a lose-lose for everyone else, lol

[pidgeon11]

this is excellent. thank you so much!

[madonakuse]

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[rakunko]

Thank you for explaining the imposable to something simple. :D

[SpottyPony]

Thanks dude! Helped a lot.

[emsta0236]

verryyy helpful. thank you

[khoshgelak07]

thanks so much! very helpful

[ShowView1]

thansk alot

[alexparkesmusic]

You're really good at what you do. Thanks for all the help!

[8644371]

You're charts are beautifully crafted.

[Lucarelli151]

thanks alot before this Video I didnt understand a thing...

I really appreciate your help

[tamtamvn]

just wondering that i got the question asked abt the range of AS. they ask to use AD and AS to clarify the range of AS... could u explain abt it for me???

[BrynJonesOnline]

@tamtamvn I have 2 thoughts. Do you mean the 2 extremes, ie where AS is horizontal when there is a lot of spare capacity in the economy and vertical when you are near to full employmentand? Or, do you mean the range of policies to alter AS such as education and training, deregulation, etc? Hope this helps.

Bryn

[Mojoman1]

how does a lot of unused resources increase AD? i dont see how it could....oh! and can you explain what you mean by inports and outputs? what are examples of that?

[BrynJonesOnline]

@Mojoman1 A lot of unused resources allows the economy to expand AS to meet an increase in AD

Inputs are the factors of production (land, labour, capital and enterprise) used to produce a nations outputs (ie goods and services)

Bryn

[poefzy]

Well now i understand better what our teacher has been attempting to show us for the last while. much clearer.

[binnie333servant]

I feel so complete!!!! I have the worst ECON teacher ever and I decided to start teaching myself which was working and now I found this little bit. You make so much sense :) thanks a billion

[MrESC831]

Love the interlude bit.

[Tarquiiiiin]

yes it does

[Sellennaaa]

@r1ccardo im kinda confused too. does the business bought count as investment or as consumption?. and the business that were already existing has already counted in the GDP of the year that it was brand new right?

sellenna :D

[BrynJonesOnline]

GDP measures new output, so if a car dealer sells NEW cars, the value of those cars is measured as it is NEW output. But, the value of second hand cars would not be included. Hope this helps

[passionkev01]

@BrynJonesOnline yeah, that sounds right :D. is it becasue if we include second hand cars we would get double counting and GDP error rgith?

[evanlemmon]

Outstanding Explanation!

[23011]

at 3:12 ,

what do you mean by firms will need 'higher prices to produce any level of output'?

[BrynJonesOnline]

If costs rise in the economy, profiy levels for firms will fall........unless firms raise prices to maintain their profit levels. So, the effect is to raise the price level in the economy for goods and services

[marcokay]

factrors which causes Aggregate Demand to shift outwards is any factor of Consumption Investment Government expenditure and net exports.

While factors which cause Aggregate Supply to shift outwards are factors such as New technology , increase in Labour productivity or research and development etc. Hope it helps

Jason

[joedall]

what cause the supply curve to shift down word. and the demand curve to shift upward..

i only know this for the supply effects.

cost effect and profit effect.

but i dont know if theirs is more thing that causes the curve to shift upward..

[BrynJonesOnline]

The AS curve will move if costs of production alter in the short run, or if the quantity or quality of factors of production (including technology) change in the long run. Hope this helps. Bryn

[TruCar1]

Thanks so much this has been really helpful, really helped explained things clearly!

[flossyxoxo]

Hi, i have a question from my homework also and i was wondering if you can lead me in the right direction?

Q:Derive the AD curve assuming an endogenous money suply. thankyou

[BrynJonesOnline]

An endogenous money supply is the money supply within the country. The amount of money in the country would influence how much consumption (C), investment (I), government spending (G) and spending on imports (M) would happen. But, how much we export (X)drepends on the money supply in other countries ( ie exogenous money supply). Hope that helps.

[BrynJonesOnline]

I would say "yes". Firstly the AD shifts to the right as Investment inreases (AD =C+I+G+(X-M) and then in the long run AS shifts to the right as the country has more capital and so can produce more; ie the potential output of the country increases

[Emperor340]

I got a question from my homework, Congress announces tax exemption scheme on new investments for small to medium sized business. Do the AD and AS curves both change?

[atoposzeretlek]

There you go! Brilliant guy, thanks Prof :) You really made clear what was just numbers and talks. Keep up the useful side of INTERNET

[GrukX]

Great video, thank you so much! I just understood in 4 minutes what my retarded teacher couldn't teach me in 2 months...

[minaina12345]

oh, but for the last diagram, my teacher has told me that the AS curve where SRAS and LRAS both increases has to be joined at the beginning, ie, they have to start at the same point, what is the difference?

[BrynJonesOnline]

Both diagrams are acceptable. I like this interpretation as it implies increasing AS reduces the price level; ie the country becomes more competitive

[minaina12345]

oh goody! this is a great video, it summaries the AD-AS analysis really well! Great job! (:

[badras00]

ALSO is that based on Keynsian Model ?

[losheva]

yap it's based on keynes model of medium term...

[BrynJonesOnline]

Yes

[badras00]

what determinants allows the AS to move to the right but with New Potential GDP as what you named "successful Supply side policy". are they the AS shifters ? or what ? Many thanks

[BrynJonesOnline]

AS shifts to the right if the economy has more resources (eg inward migration) or it uses its resources more efficiently (ie an increase in the productivity of land, labour, capital or enterprise)

[badras00]

Ok then if a determinant of the AS Increases or decreases such as " Price of Inputs, TAX, Etc", then AS will only shift upward or downward. True ?

[BrynJonesOnline]

Correct. The upward/downward shift is the short run AS movement caused by a change in the price of inputs. The shift to the right is due to long run factors such as more factors of production or more productive factors of production

[saiyoke]

i don't understand a single bit.... damn it... im studying quantity surveying but i need to study economics... why???????????

[rubindr]

Aggregate supply shifts upward at every price level

[Offatwork]

I see how this addresses the Phillips curve but how does this address stagflation?

Or am I over-reading this video?

[rubindr]

can you explain the IS-LM model and liquidity traps

[rung3000]

does he 'derieve' the SRAS?

[dunsedog]

ive been taught a rise in cost would shift AS left not upwards like he has, am i wrong

[BrynJonesOnline]

No, it's just a different interpretation. I say shift upwards because if you say shift to the left, it means the maximum potential output would decrease and I don't see how this follows. But, either one is fine. Good luck

[ergudmun2]

nice ad clean!=)

[greatjob714]

this is fucking useful and clear

thanks mate

[abab676]

Theee best explanation of A.D. and A.S. I've seen so far....

[cstarbon]

Still confused and my problem is more or so with the numbers part of it.

[rudyblackbird]

still a little confused

[Izzygp]

Simple to understand presentation. Thanks

[beav246]

if i see this one more time in my economics class i am going to cry ;(

[foal111]

Ive spent 4 months..and 4 different books..

but am still confused..

ur gettin thr..keep at it bro..!

[JamesEvsEvans]

Really useful video - cheers!

Important to remember this uses the Keynesian concept however.

[foal111]

whr did Keynesian come in here??

Theres no intervention mentioned explicitly except in last diagram.

[jaopaosam]

The AD-curve doesn´t have to be a downward-sloping straight line, rather it´s concave.

[santiagocalvopina]

Thanx a lot. Your video was really helpful for my Macroeconomics class. Interlude was cool also.

[slipgiz]

I liked the musical interlude, who was that?

[TomSka]

That'd be me

[channanox]

you sir, are the reason I can take an exam confidently. Thank you.

[yeeeees91]

thank you:)

[BolivianLlama]

bloody awesome. thanks man!!!!!

[RagingBlitz]

awesome dude keep up the good work

[Nickz1471]

This was very helpful, thankyou... The interlude is jokes

[stanvideo]

I am taking an online class in economics and found this video very, very helpful. I will suggest this video to everyone on my class. Thank you.

[supermajic]

Incredibly helpful thank you very much.