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
You're literally the BEST economics teacher in the world. Who can always explain anything so simply. When I'm struggling with a topic and I see you haven't made a video on it, it actually makes me so sad
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!
You rock... you just helped me pass my Economics exam, and more importantly, to understand some of the economic concepts I have not understood in class. Thanks heaps. :)
@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.
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.
@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).
IS curve represents the equilibrium in the goods market (Y= C+I+G+NX) (nx if the market is open) whereas the ad curve represents the equilibrium in both goods and financial markets (represents the equilibria shown by the IS LM model, hence the name aggregate demand) and is characterized by Y= Y(M/P, G, T) at least in the short run and medium run ( Y being output, M/P the real money stock, G govt spending and T taxes) Hope that helps.
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!
@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
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! :)
@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.
@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.
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?
@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?
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
Wish i had u as my economic teacher lol...i have my final exam in 2 weeks and this really helped...appreciate ur work mate..nd 4 some haters out der if u dnt like it then try nd make a better video, that is all..
I wonder why the LRAS curve is bowed. I'm taking the macroeconomics course right now and my textbook (principles of economics EU 2nd edition) displays the LRAS curve as a straight vertical line aswell as the SRAS (short run aggregate supply) as a straight horizontal line. /Emil, University of Jonköping, Sweden
Hi there Pajholden! Thankyou for ur wonderful videos so far! Cld you please do a video on evaluation of economic policies to solve economic problems? I believe it would be a great help to many! Thx!
The fiscal "multiplier" is explained by Mr. Holden's AD = C+I+X-M+G, which shows that there is no multiplier effect. So the multiplier effect can't make demand management difficult, as he says it does. I'm just wondering if he has an explanation for talking about a "multiplier", when AD = C+I+X-M+G shows that there isn't any multiplier.
how does this fit in to the debt based monetary system when debt levels are at you could say saturation levels? it's like the equation is missing the whole impact of Debt in the system. how much can they 'stimulate' consumption if say the debt levels are at saturation levels?
a way to calculate is 1 / (1 - MPC) or 1 / (MPM + MPC + MRT) or at least thats what the school taught us :) but yeah, ive watched all your videos this weekend, thanks so much! I have my exam in 3 hours :P I owe it to you
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
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?
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.
@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.
The multiplier effect, k, in most textbooks comment that it can be calculated with the formula k = 1 / marginal propesity to withdraw. For your explaination i didn't see any mention of this part. Is this formula in any way not possible to collect due to imperfect information of part of the goverment?
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?
In fact Washington Loan Agreement undoubtedly hurt the UK economy when in 1947 their was a run on Sterling which was the direct result of the loans terms. Furthermore I don't think its much of a stretch that the lack of quick economic recovery is what lead to the decolonisation experienced in this period starting with India in 1947.
By accurately calculating the MPC and MPS within context of ADF as it applies to the multiplier and associated accelerator; deducting leakages via the business cycle (taxes, inflation et al). One can calculate AD to reach full employment and therefore growth in real GDP in an economy. This requires sophisticated modeling accurate raw data analysis.
Some people just have a way with words that makes everything seem so simple. You sir have that way with words!
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
And now you have 2.21 milion subs.
I FINALLY understand the multiplier effect. Brilliant, thank you so much.
What I would not have given to have you as my professor. You have the gift of a true teacher: an elegant explanation of the Byzantine.
You're literally the BEST economics teacher in the world. Who can always explain anything so simply. When I'm struggling with a topic and I see you haven't made a video on it, it actually makes me so sad
just watched this at home after missing practically the whole lesson on this in AP economics.SOOOO HELPFUL!!!!!!! thanks!
Thanks so much for these videos! You're so much easier to understand than my teacher!
Omg your comment is so old . Can you respond to me oh people of the past
cheers took me hours to get to terms on what your video explained in under ten minutes. Bless you
This man should get an AWARD, makes it so simple. THANK YOU
0:41 G is also a component of Paj. Paj is a G. Ma G.
I love how you can explain something in 9 minutes better than my AP Econ teacher can in 2 hours.
I have learnt more in two of your videos than I have in about 6 economics lessons. Very good going.
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.
Excellent video. Very helpful and informative.
As an International Business freshman, I'm sure this knowledge will prove extremely useful.
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!
You rock... you just helped me pass my Economics exam, and more importantly, to understand some of the economic concepts I have not understood in class. Thanks heaps. :)
from now on you are my economic teacher !!!!
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!
oh you are a life saver! you're making macroeconomics so much easier for a economics-challanged student like myself. thankyou thankyou thankyou
You have a gift Mr Holden. Thank you for sharing it with us.
Economics exam tomorrow, you're more educational than any textbook or exercise
just brilliant. The videos are so easy to understand. I recommend these videos to everyone I know. Just brilliant
Thank you for helping so many people
Real good lesson.Your are blessed with a real teaching skill!All the best to you from a collegeu in Sweden.
you're actually so good all your videos are helpful thanks so much
my teacher couldnt teach this for my exam today over a whole term. thank you sir
Thanks so much Phil! You have no idea how much this has helped me.
These vids are gold. This will help me turn things around thanks PAJ
Καλη συνεχεια! Τα βιντεακια σου με εχουν βοηθησει πολυ σε επαναληψεις
@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.
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.
Excellent presentation and now I have a better understanding.
Brilliant video mate, put very simply and easy to understand. Cheers
Thank you for your great explanations! You make it much simpler to understand.
deffo just learnt the most i have ever learnt in this whole year in economics
Thank you so much. You really know how to make something complicated simple.
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).
brilliant lesson, I have been trying to understand the multiplier effect for almost a year
my exam is in half an hour and this video is all I really know! thanks
@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).
IS curve represents the equilibrium in the goods market (Y= C+I+G+NX) (nx if the market is open) whereas the ad curve represents the equilibrium in both goods and financial markets (represents the equilibria shown by the IS LM model, hence the name aggregate demand) and is characterized by Y= Y(M/P, G, T) at least in the short run and medium run ( Y being output, M/P the real money stock, G govt spending and T taxes)
Hope that helps.
thanks a lot for posting these videos! you're presentation skills are very good, so it's fun to learn by watching.
keep it up!
Cheers for this! Makes it very simple to understand the multiplier effect
Very true on inaccuracy of management of AD....Thank you.
YOU ARE THE MAN! I seriously love you right now.
The way he smiles at the camera at the end, then looks away and groans LOOL!!
Great lecture!!
Greetings from Vancouver, Canada
Home of the 2010 Olympics
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!
@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
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! :)
@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.
You actually make me want to like Economics, you're really good
Thank You so much Sir =)
I LOVE YOU! SAVED ME FOR MY TEST TODAY!!!!!
YOU ARE GREAT!!!
soo much better than my lecturer !
:D! so i'm just waiting for this multiplier effect to kick in here in California.
great video! thanks professor.
@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.
thank you so much sir, my teacher couldnt teach this in 2 weeks, i learned it in 10 mins. :)
awesome video :) watching a video like this every week is better than two hours with my economics teacher haha
I actually love this guy, saving my life ATM !!!
Light bulb just turned on in my head! Thanks a lot this is great!
Excellent video, very clear and helpful. Cheers
you are great teacher on youtube but in our classroom also...great video btw :D
Good explanation in simple terms. Thank you!
Hope you'll add more vidio topics here, i like how you make economics easier to understand...thanks!
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?
thank you sooooo much
you have no IDEA how much this has helped!
Excellent video.. 5 stars
@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?
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
Wish i had u as my economic teacher lol...i have my final exam in 2 weeks and this really helped...appreciate ur work mate..nd 4 some haters out der if u dnt like it then try nd make a better video, that is all..
I wonder why the LRAS curve is bowed. I'm taking the macroeconomics course right now and my textbook (principles of economics EU 2nd edition) displays the LRAS curve as a straight vertical line aswell as the SRAS (short run aggregate supply) as a straight horizontal line.
/Emil, University of Jonköping, Sweden
Hi there Pajholden!
Thankyou for ur wonderful videos so far!
Cld you please do a video on evaluation of economic policies to solve economic problems? I believe it would be a great help to many!
Thx!
Great explanation sir.
THANK YOU!!!!!!!!! I FINALLY UNDERSTAND THE MULTIPLIER EFFECT.
The fiscal "multiplier" is explained by Mr. Holden's AD = C+I+X-M+G, which shows that there is no multiplier effect. So the multiplier effect can't make demand management difficult, as he says it does. I'm just wondering if he has an explanation for talking about a "multiplier", when AD = C+I+X-M+G shows that there isn't any multiplier.
Amazing! london univeristy economics professor or Mr Holden, no brainer really, thanks!!!!
how does this fit in to the debt based monetary system when debt levels are at you could say saturation levels?
it's like the equation is missing the whole impact of Debt in the system.
how much can they 'stimulate' consumption if say the debt levels are at saturation levels?
excellent presentation
a way to calculate is
1 / (1 - MPC) or
1 / (MPM + MPC + MRT)
or at least thats what the school taught us :)
but yeah, ive watched all your videos this weekend, thanks so much! I have my exam in 3 hours :P I owe it to you
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
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?
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.
Hi thanks for your videos of all topics . Really it's helpful for me
@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.
A freaking legend!
I am currently taking macroeconomics. Thank you sir!
very helpful video for someone taking macroeconomics
Thank-you! :D I have an exam tomorrow and I feel slightly more confident.
The multiplier effect, k, in most textbooks comment that it can be calculated with the formula k = 1 / marginal propesity to withdraw. For your explaination i didn't see any mention of this part. Is this formula in any way not possible to collect due to imperfect information of part of the goverment?
I did really good in Economics because of you
these videos help me to understand when my professor does not!
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?
In fact Washington Loan Agreement undoubtedly hurt the UK economy when in 1947 their was a run on Sterling which was the direct result of the loans terms. Furthermore I don't think its much of a stretch that the lack of quick economic recovery is what lead to the decolonisation experienced in this period starting with India in 1947.
By accurately calculating the MPC and MPS within context of ADF as it applies to the multiplier and associated accelerator; deducting leakages via the business cycle (taxes, inflation et al). One can calculate AD to reach full employment and therefore growth in real GDP in an economy. This requires sophisticated modeling accurate raw data analysis.
Such a good teacher thanks
If I want to start Macroeconomics from Scratch having a fair knowledge on Microeconomics, what is the flow of videos that must be viewed?
u explained stuff better than my teacher .. can u please explain the Liquidity trap, Animal Spirit and crowding out?
Thank you!! This is a truly amazing video!
Perfect and easy to understand!
Thank you soooooo much!!! :D You are a lifesaver for all of us!! :d
YES, how scared are you? I really need to do well, I hope I do, these videos really do help, and thank you Paj for helping me the other week on Skype!