You are a life saver! I'm having a horrible time taking macroeconomics, never mind getting my head around this Philips curve concept. You've managed to break down some invisible wall that was blocking the receptors in my brain from picking up this mysterious economic frequency.... but seriously , this was by far the best explanation in a video that I could find!
With the issue happening in Australia lately got me thinking about the Phillips curve that I learnt about at high school and uni. Australia is under their natural unemployment rate. ~4 to 5% is the natural rate in Australia but currently it is 3.5% and dropping fast due to the rising cost of housing due to landlords who are charging more based on what it costs them so they can hold their ROI. The quarterly inflation rate is at 5.1% with the current interest rate at 1.35%. Due to the 13.5x fold rise in the interest rate (from 0.10%) most rentals have went up 10 to 30% just this year, which has led to more people not just... wanting a job.. but needing a job.. which is at the lowest level of the Maslow's hierarchy of needs as it is a requirement for survival. Now that more people have a job it has raised the demand for the low stocks of food and goods we have, which has raised prices up severely, so inflation will continue to grow. Now when inflation grows, our central bank has a tendency to raise interest rates to keep their monetary policy stable. Which then has the lead on effect of landlords pushing up prices on rentals, which has the lead on effect of more people requiring a job to survive. It feels like we are going to go into some nasty loop if the govt and central bank cannot sort out the mess.
I’m taking Economics course in my Masters Degree and I can tell you now this guy explains it a hundred times better than my lecture who I’m paying to explain sh*t to me clearly 🤦♀️Thank you khan academy 😊
David Ryan There really is not a difference. Natural rate of unemployment is now referred to as the non-accelerating inflationary rate of unemployment. The new term is in my opinion, an attempt at being politically correct. Natural rate of unemployment has cultural undertones that suggest some people are unemployable. The NAIRU on the other hand is a measurable rate of unemployment at which above this rate inflation will occur. The term may be more confusing at first glance, but is a more precise label.
Sustainable rate of employment? What do you mean by sustainable? We need people to produce goods and sevices, do what kind od sustainbility are we taking about?
Hi Jan, from my understanding, a higher inflation rate is caused by low unemployment. Employers have to raise wages to attract employees as the unemployment rate drops (more competition for labor). The raise in wages increases people's income, increasing demand for goods. The increase in demand for goods results in a shock to firms and manufacturers, which in the short term increases the output, but at the same time increases prices. (Over time, once companies adjust to the demand, the prices go back down). This increase in costs is passed on to the consumer, increasing the cost of living, resulting in a lower buying power and employees requesting higher pay. That's how lower unemployment levels increase inflation
@@venturaanselmo78 Another way to view this is that when the Federal Reserve increases the money supply, this causes people to borrow more at lower interest rates, which increases aggregate demand, causing more goods and services to be produced in the short run at higher prices and thus more people getting hired
![แฉ [2/4] 17 ก.ค. 67 “ลิลลี่ เหงียน” เปิดใจหลัง “เอิร์ก เลเดอเรอร์” ตอกกลับเรื่องโกงเงิน 50 ล้าน](http://i.ytimg.com/vi/s8KapfEO5NI/mqdefault.jpg)
You are a life saver! I'm having a horrible time taking macroeconomics, never mind getting my head around this Philips curve concept. You've managed to break down some invisible wall that was blocking the receptors in my brain from picking up this mysterious economic frequency.... but seriously , this was by far the best explanation in a video that I could find!
Me too >.< I'm studying for my macroeconomics exam next week!
@@ndhk studying 3 hrs before my final, how'd u do
@@calvinnguyen1097 I didn't get my mark back yet but I think it went well 😊 Good luck!!
@@ndhk Did you pass or flop?
@@standowner6979 Haha yeah I passed intro macroeconomics and I passed intermediate macro this summer!! now i'm in advanced macro woooo
Simply awesome - i am an economics teacher myself - but i wish i could explain with this much of clarity and simplicity. Thank you - i too learnt!
Phillips staring into my soul for 8 minutes was horrifying
i didn't realize that until i read this but now its creepy af lol
great explantation, even a 30 min video didn't solve my query but this one was the saviour. kudos to the team
With the issue happening in Australia lately got me thinking about the Phillips curve that I learnt about at high school and uni. Australia is under their natural unemployment rate. ~4 to 5% is the natural rate in Australia but currently it is 3.5% and dropping fast due to the rising cost of housing due to landlords who are charging more based on what it costs them so they can hold their ROI.
The quarterly inflation rate is at 5.1% with the current interest rate at 1.35%. Due to the 13.5x fold rise in the interest rate (from 0.10%) most rentals have went up 10 to 30% just this year, which has led to more people not just... wanting a job.. but needing a job.. which is at the lowest level of the Maslow's hierarchy of needs as it is a requirement for survival.
Now that more people have a job it has raised the demand for the low stocks of food and goods we have, which has raised prices up severely, so inflation will continue to grow. Now when inflation grows, our central bank has a tendency to raise interest rates to keep their monetary policy stable. Which then has the lead on effect of landlords pushing up prices on rentals, which has the lead on effect of more people requiring a job to survive. It feels like we are going to go into some nasty loop if the govt and central bank cannot sort out the mess.
I can definitely trust this man’s voice
Can you do the IS-LM-PC model, please?
Tremendous video! Thanks, Khan Academy!
I’m taking Economics course in my Masters Degree and I can tell you now this guy explains it a hundred times better than my lecture who I’m paying to explain sh*t to me clearly 🤦♀️Thank you khan academy 😊
Ikr i dont get how some of these professors landed their jobs
you just saved my life Sir
Khan definitely explained far more better than economics lecturer
Movements along an SRPC indicate aggregate demand has changed. Shifts of the of the SRPC indicate a change in short-run aggregate supply.
how does the curve shift?
wonderful explanation sir !!
Simply Awesome.
Love from ❤️
Best explanation of the concept
In short run Phillips curve holds true but not in long run.
Kushagra Khanna 1
How?
Thank you
tons of unanswered questions!
I'm goin.. willing to make you my fav teacher :)
Clear explanation
On the AD/AS diagram the final inflation rate is higher than the final inflation rate on the Philips diagram...
I was wondering the same thing
@@discover685 it should be higher on Philips diagram
What happens to wages? Do they go up because prices are higher? Which means less workers but higher wages?
higher prices mean that the workers have less purchasing power at a given wage, and therefore they negotiate for higher wages,
@@alexanderkaracsony8830 this is wage push inflation and a type of cost push inflation yeah
Difference between the NRU and NAIRU!?
David Ryan There really is not a difference. Natural rate of unemployment is now referred to as the non-accelerating inflationary rate of unemployment. The new term is in my opinion, an attempt at being politically correct. Natural rate of unemployment has cultural undertones that suggest some people are unemployable. The NAIRU on the other hand is a measurable rate of unemployment at which above this rate inflation will occur. The term may be more confusing at first glance, but is a more precise label.
Sustainable rate of employment? What do you mean by sustainable? We need people to produce goods and sevices, do what kind od sustainbility are we taking about?
💎
Well explained, nevertheless the yellow dot is awful
Crystal clear
Why is the supply curve in the long run perfectly inelastic?
Because
M*V=P*Q, or:
AD=M*V, as nominal GDP
AS=Q, as real GDP
L
Changes in the money supply do not affect variables like real GDP. This is the classical dichotomy
is this mainstream theory? :D
Mujhe samjh nhi aya khan sir.... esko hindi m q nhi btate
I still don't understand why philips curve would shift to the right!
Doesn't make sense to me, with higher inflation, there would be unemployment!
Hi Jan, from my understanding, a higher inflation rate is caused by low unemployment. Employers have to raise wages to attract employees as the unemployment rate drops (more competition for labor). The raise in wages increases people's income, increasing demand for goods. The increase in demand for goods results in a shock to firms and manufacturers, which in the short term increases the output, but at the same time increases prices. (Over time, once companies adjust to the demand, the prices go back down). This increase in costs is passed on to the consumer, increasing the cost of living, resulting in a lower buying power and employees requesting higher pay. That's how lower unemployment levels increase inflation
@@venturaanselmo78 Another way to view this is that when the Federal Reserve increases the money supply, this causes people to borrow more at lower interest rates, which increases aggregate demand, causing more goods and services to be produced in the short run at higher prices and thus more people getting hired
@@venturaanselmo78 A higher inflation rate is not caused by lower unemployment. A higher inflation rate causes lower unemployment, hahaha
Jan Sasha The Phillips curve will shift to the right when the aggregate supply curve shifts to the left.
sorduk mu
Katiliyorum
i wonder how many of these out dated models are utter BS?