Government spending and the IS-LM model | Macroeconomics | Khan Academy
HTML-код
- Опубликовано: 16 сен 2024
- Courses on Khan Academy are always 100% free. Start practicing-and saving your progress-now: www.khanacadem...
How a change in fiscal policy shifts the IS curve
Watch the next lesson: www.khanacadem...
Missed the previous lesson? www.khanacadem...
Macroeconomics on Khan Academy: Topics covered in a traditional college level introductory macroeconomics course
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy's Macroeconomics channel: / channel
Subscribe to Khan Academy: www.youtube.co...
Dear Mr.Khan,
i hope you are reading this,because I am SO grateful for your videos!
I am studying medicine and I had my chemistry test today,and I only passed because of YOUR great ability of explaining chemistry in a simple way.
Thank you so so much!
U studying business too?
Why not write AI instead of Y on the x-axis? We know in equilibrium AE=AI=GDP=Y so by implication Y can only be AI on the x-axis of the first graph. To confuse further equation Yp = Planned Expenditure. Why not AEp?. On one graph Y has to different conceptual meanings. Why not takeout the guess work and write AI, AE or even GDP to be clear ? It confuses what are relatively straight-forward concepts until the Y notation is introduced
This was truly helpful, thank you so much for putting it up!
Regards,
Satya
Thanks very much my teacher
Can you please start doing grammar videos, you helped me so much in math that it has now become my favorite subject. I'm having a difficult time passing my English 101 class, I currently have a B in the course but I'm having trouble with impromptu writing. Please thumps up this comment so that maybe he'll see it.
If the level of government spending were to decrease by 100 units in the IS - LM schedule
model, how would this affect the position of the IS schedule? In which direction would the
schedule shift, and by how many units?
Really helpful video, do you have any intention of doing a similar video which would look at the Mundell - Fleming Model? This would also be very helpful for me.
Amazing!
it's really clear and useful! Thanks
It is a very basic level video...not needed for economics entrance
Such an amazing video:) Thank you
Don't forget the second-order effect :), 'r' goes up from shift right due to govt spending up. But 'I' comes down because it is a function of 'r'. Shifting slightly back left the IS curve. Like if you agree :)
I just hit the JACKPOT!!!
Thank you :") so exciting!
Love the analogy ...
hi salman , after completing medicine , now want to change into management and healthcare and understanding economics had never become easy for me ... thanks to your videos ... i am too interested to teach biology and chemistry ... meet you soon .
my stupid teacher should just tell me to watch this video so i wouldnt have to spend half the day in lectures and driving.
Another thing khan can teach that my damm professor I'm paying for can't.
thank u so much, who has exams like me and he s here because he did nt prepare well hhhhhh.
Dear Sir(Mr. Khan). and to anybody who knows the answer to my doubt. S= I + (G-T) + (X-M). Subject it for the fiscal balance. The resultant equation shows that a positive fiscal balance(govt spending>taxes) is possible only by the private sector saving more than investment or by importing more than we export thereby causing an inflow of foreign saving to finance the fiscal deficit. What I dont understand is that why cant a positive fiscal balance be supported by a positive trade balance instead of relying on foreign saving to support it. Thank you.
Generally the only income a government has is tax revenue. So a positive or negative trade balance doesn't affect government revenues, only taxes do. The trade balance affects GDP, which is a measure of the overall economy, not the wealth of a government. Government spending is only a component of GDP. Hopefully that helps a bit.
I love you!
Dear Sir,(Mr.Khan). In a previous video you said that if govt expenditure increased and as a result equilibrium GDP increased, the effect of this on the IS curve would be that the increase in GDP caused savings to increase which lower real interest rate. Since this is not what happened in your example in this video, is it because due to the central bank intervening to stop the economy from overheating that the real interest rate increased? If not what you said is contradictory.
Previous one was government printing money
But here he is saying government expenditure not printing money 5:30..
Why does an increase in govt.spending increase planned expenditure? Whats the link?
Planned expenditure is determined by the function C(Y-T) + I(r) + G. An increase in the variable G with all else being constant (ceteris paribus), must result in an increase in planned expenditure. Simple math
thank u.. :-)
how come when the real interest rate goes up we have a decrease in the level of GDP/income when we know that real interest rate is the growth rate of purchasing power derived from investment?> i understand we can see from the IS curve what happens but i dont understand why this happens..can anyone explain?
Look it up idk 😂
Could anyone explain....what would happen in the long run?
+Damian De la Garza It would depend on whether we have a fixed or floating exchange rate. If it would be fixed and we increase (G,) (IS) shift out, giving us a higher (i) than the rest of the world (i>i*). Since our (i) is higher than the rest of the world, people want to invest their money in our country since the profits will increase. Making (KX) decrease and (KM) increase, which will shift the (D) curve on the currency market in and the (S) curve on the currency market will shift out. Making the currency wanting to depreciate. Which makes the Central Bank having to buy the unwanted currency and selling their own, to keep the fixed exchange rate. Making the (MS) curve shift out since the money supply is higher, which shifts the (LM) curve out till we reach (i=i*). Giving us a higher (Y).
in long run we have fisher law
read Gregory Mankiw's book on macroeconomics
what about investment spending?
very good point. Ask yourself what's the difference between government spending and government investment?
@@KyleTheLEGOMaster Government investing is on productive activity, Government spending is on purely consumption activity?
sir please mention the name of the given curves
Salman Khan is one of Time 100 list wrote by Bill Gates! How AWESOME is THAT?!
This is the kind of "economics" I hate. How can government spending increase GDP when you have to decrease people's incomes in order to collect taxes. Ideally you want low taxes but that doesn't CAUSE GDP to go down :/
in order to increase GDP, the government must increase its spending and decrease taxes. :)
in order to increase GDP, the government must increase its spending and decrease taxes. :)
nope. in order to increase GDP, the government must increase its spending and decrease taxes. :)
if we assume people are not spending money - gov tax + spending will increase GDP = take the NL - High tax + high GDP, no tax no spending we have in Antarctica
I know this is super old, but it showed as top comment for me so I'd like to explain this. In this example we are saying C (consumption) is a function of income Y - taxes T, this is in other words "disposable income", in this video they only talk about increasing government spending without increases taxes which if course causes a budget deficit and a bunch of other stuff, but yes in this video if taxes were to stay at the same level and the government were to run a deficit GDP would increase. But you're asking more about "well they have to raise taxes to pay for that spending" which is true, and if we did some funky maths eventually you can work out that a change in government spending, and the same change to taxes (so no deficit etc) would change GDP by a multiple of 1, which basically sucks. So what I'm trying to say is in reality the government doesn't keep the taxes fixed, so this video doesn't explain that, but this Keynesian cross model is a very basic and simplified model so we normally just miss out parts just so we get a general feel for how interest rates effect GDP.
Side note another thing Keynesian cross model neglects is inflation and hence changing price levels which is pretty important, but like I said, this is more of a general model.
Khan Academy, you're using illegal math.
At 4:06 you show:
ΔY = (1/(1-mpc)) ΔG
That's illegal addition: ΔG
before multiplication by 1/(1-mpc)
You have to start at ΔG = 0,
so you can multiply before adding: P-E-MD-AS:
ΔY = (1/(1-mpc)) ΔG
0 = (1/(1-mpc)) 0 [Start at delta zero]
0 = 0 [Multiply]
1 = 1 [Add]
ΔY = ΔG
P-E-MD-AS
ΔG = (G2-G1)
Parentheses first. And its subtraction, not addition.
Khan Academy is using illegal math, guy.
And you're saying, that 0 + 1 is subtraction?
Why do you want to quibble, when Khan Academy is using illegal math?
Hossein Rostam, I now see the trick you were trying to pull.
Another guy tried to pull it on me, but he was more clear.
1) G1 + ΔG = G2 [Add]
2) ΔG = G2 - G1 [Subtract]
Then:
3) ΔY = (1/(mps)) ΔG
4) ΔY = (1/(mps)) (G2 - G1)
And parentheses come before multiplication.
HOWEVER ... in the context of the multiplier
equation 1 is illegal addition before multiplication,
and equations 2 is meaningless
because it follows an illegal operation.
So equation 4 is also meaningless.
Since you're using baseline variables: G2 - G1
you need baseline equations to see the illegal math: 1) G1 + ΔG = G2
Y1 = (1/(1-c)) (-cT + Co + I + NX + G1)
+ ΔG
Y2 = (1/(1-c)) (-cT + Co + I + NX + G2)
That's illegal addition to G1,
before parentheses and multiplication.
You can do that operation legally here:
Y1 = C + I + NX + G1
+ ΔG
Y2 = C + I + NX + G2
because there's no multiplication.
I'm looking for more examples of the trick.
Did you learn it in a course, or online somewhere?
Hеrееeе аrе just а fеw оf thе kеу sесrеts insidе mу INCRЕDIBLЕ trаding sоftwаre.==>twitter.com/5a085d502fa946eb6/status/804699524132278272 Gоvеrnmеnt sреnding аnd thе IS LМ mоdеl Mасroеconоmiсs Кhаn Aсаdеmу
If the level of government spending were to decrease by 100 units in the IS - LM schedule
model, how would this affect the position of the IS schedule? In which direction would the
schedule shift, and by how many units?