Department of Economics, the Keynesian "multipliers" are for spending increments. Increment variables have deltas, for instance ΔY, ΔCo, ΔT, ΔI, ΔG. At about 9:40, you show a "multiplier" equation with baseline variables: Y = (1/(1-c1)) (Co -c1T + I + G) You can't increment anything in (Co -c1T + I + G) because that would be illegal addition or subtraction before parentheses and multiplication. This is the multiplier equation for increments: ΔY = (1/(1-c1)) (ΔCo -c1ΔT + ΔI + ΔG) 0 = (1/(1-c1)) (0 -c1(0) + 0 + 0 ) [Start at delta zero] 0 = 0 - 0 + 0 + 0 [Multiply] 2 = 1 - 1 + 1 + 1 [Add and subtract] P-E-MD-AS says there's no multiplier because you must multiply BEFORE adding and subtracting.
Your explanation is so simple and clear! Thanks a lot! The electronic highlighter and the hand writing is also fascinating. Do you mind to share what kind of program you are using for this video?
I have a question regarding the use of variables. Y is income but Y is also GDP, determine by C+I+G+(X-M). Now the other variable on the graph is Z, total demand in a country, ask AD, which also has the same formula has GDP. How does one graph have two variables on each axis which are calculated in the same way? Ty
Department of Economics, your video is NONSENSE. At about 5:55, you have this equation: Z = Co + c1(Y-T) + I + G And you say the endogenous part of demand is c1 times Y: c1Y At about 6:09 you say: "If aggregate income rises by a dollar aggregate demand will rise by a fraction of that, c1." That's complete, and obvious, nonsense. You can't increase the value of Y in the equation Z = Co + c1(Y-T) + I + G because that would be ILLEGAL addition to Y before parentheses: (Y-T) and before multiplication of (Y-T) by c1. Considering just your expression c1Y, increasing the value of Y by $1 would be ILLEGAL addition to Y before multiplication of Y by c1. P-E-MD-AS (from GRADE SCHOOL) shows that parentheses and multiplication come BEFORE addition, not after.
Your explanation is so simple and clear, ı understand more in here than my class. Thanks !
Department of Economics, the Keynesian "multipliers" are for spending increments.
Increment variables have deltas, for instance ΔY, ΔCo, ΔT, ΔI, ΔG.
At about 9:40, you show a "multiplier" equation with baseline variables:
Y = (1/(1-c1)) (Co -c1T + I + G)
You can't increment anything in (Co -c1T + I + G)
because that would be illegal addition or subtraction
before parentheses and multiplication.
This is the multiplier equation for increments:
ΔY = (1/(1-c1)) (ΔCo -c1ΔT + ΔI + ΔG)
0 = (1/(1-c1)) (0 -c1(0) + 0 + 0 ) [Start at delta zero]
0 = 0 - 0 + 0 + 0 [Multiply]
2 = 1 - 1 + 1 + 1 [Add and subtract]
P-E-MD-AS says there's no multiplier
because you must multiply BEFORE adding and subtracting.
Your explanation is so simple and clear! Thanks a lot! The electronic highlighter and the hand writing is also fascinating. Do you mind to share what kind of program you are using for this video?
please explain mathematically how you get (1-c1)Y. In more detail, my math is rusty
2:13 Why don't we also have the financial markets (financial investments) and overseas markets (exports)?
Closed economy so IM and EX=0
I think he's assuming this is a closed economy so NX is assumed = 0?
+Connor Jung yeah.. 7:04
Thanks for clearing the graph up. Keep up the good work.
I thought the aggregate demand should also include net export?
+Van Nguyen It should be a closed economy
+Van Nguyen 7:06..he said that
I have a question regarding the use of variables. Y is income but Y is also GDP, determine by C+I+G+(X-M). Now the other variable on the graph is Z, total demand in a country, ask AD, which also has the same formula has GDP. How does one graph have two variables on each axis which are calculated in the same way? Ty
Awesome!!
Department of Economics, your video is NONSENSE.
At about 5:55, you have this equation:
Z = Co + c1(Y-T) + I + G
And you say the endogenous part of demand is c1 times Y:
c1Y
At about 6:09 you say:
"If aggregate income rises by a dollar
aggregate demand will rise by a fraction of that, c1."
That's complete, and obvious, nonsense.
You can't increase the value of Y in the equation
Z = Co + c1(Y-T) + I + G
because that would be ILLEGAL addition to Y
before parentheses: (Y-T)
and before multiplication of (Y-T) by c1.
Considering just your expression c1Y,
increasing the value of Y by $1
would be ILLEGAL addition to Y
before multiplication of Y by c1.
P-E-MD-AS (from GRADE SCHOOL)
shows that parentheses and multiplication
come BEFORE addition, not after.
Kindly need more explanation like.... It is classical or Keynesian etc