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
Is that why we get … Is that why we get bubbles in are economy? Goverment spending… I find it funny how every time goverment spends money in a certain area in the economy prices go up for example education healthcare and earlier houses.
if the government … if the government spends money, it should give it to poorer people, because the poor spend a higher % of there income than the rich (doctors).
You left out that … You left out that the Philip’s Curve is only valid in the short run and real inflation is a purely monetary phenomenon. 2006 Nobel Prize winner Edmund Phelps showed this.
Imagitarded … Imagitarded continued post
There isn’t a right or wrong diagram but diffrent chef examiners do prefer diffrent economics theories so it may be worth while looking in too what type of economics your chef examiner supports and then using the appropriate diagram in your exams, allso if you feel confident with both you can allways use it to evaluate your work I.e so and so depends upon what economic model it is applied on.
The reason he displays it like this is becuase this is what kensyen economists belive the LRAS curve looks like.
The one illustrated in your text book is what classical free-Market economists belive it looks like.
I wonder why the … 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
i wish you had … i wish you had shown what happens PC/MPRF diagram when government implement monetary expansion and what happen to PC/MPRF diagram when government implement a monetary contradiction.I have assignment and have to answer these two questions in 2 days.
how does fiscal policy work for a government? Why does the multiplier effect make demand management so difficult?
March 3rd, 2010 at 2:12 am
awesome, great for …
this is gonna be useful for my upcoming IB exams
awesome, great for revision
March 3rd, 2010 at 2:12 am
Great lecture!!
…
Great lecture!!
Greetings from Vancouver, Canada
Home of the 2010 Olympics
March 3rd, 2010 at 2:12 am
@totempoll27
…
@totempoll27
bubbles are formed by fiscal and monetary policy that are both too expansionary, and reckless. if you live in the states youll know what i mean.
March 3rd, 2010 at 2:12 am
@MrSweetchoklet
…
@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
March 3rd, 2010 at 2:12 am
you’re great.
you’re great.
March 3rd, 2010 at 2:12 am
The formula used to …
The formula used to figure the multiplier is…change in real GDP divided by the initial change in spending.
March 3rd, 2010 at 2:12 am
Is that why we get …
Is that why we get bubbles in are economy? Goverment spending… I find it funny how every time goverment spends money in a certain area in the economy prices go up for example education healthcare and earlier houses.
March 3rd, 2010 at 2:12 am
what is the …
what is the formulae of multiplier effect
March 3rd, 2010 at 2:12 am
if the government …
if the government spends money, it should give it to poorer people, because the poor spend a higher % of there income than the rich (doctors).
March 3rd, 2010 at 2:12 am
Thank you for your …
Thank you for your great explanations! You make it much simpler to understand.
March 3rd, 2010 at 2:12 am
You left out that …
You left out that the Philip’s Curve is only valid in the short run and real inflation is a purely monetary phenomenon. 2006 Nobel Prize winner Edmund Phelps showed this.
March 3rd, 2010 at 2:12 am
I like how he said …
I like how he said about doctor pay rises “It dosent stop there” lol, it sounded scary.
March 3rd, 2010 at 2:12 am
Imagitarded …
Imagitarded continued post
There isn’t a right or wrong diagram but diffrent chef examiners do prefer diffrent economics theories so it may be worth while looking in too what type of economics your chef examiner supports and then using the appropriate diagram in your exams, allso if you feel confident with both you can allways use it to evaluate your work I.e so and so depends upon what economic model it is applied on.
March 3rd, 2010 at 2:12 am
Imagitarded
The …
Imagitarded
The reason he displays it like this is becuase this is what kensyen economists belive the LRAS curve looks like.
The one illustrated in your text book is what classical free-Market economists belive it looks like.
March 3rd, 2010 at 2:12 am
I wonder why the …
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
March 3rd, 2010 at 2:12 am
check out Youtube …
check out Youtube username mjmfoodie — another GREAT econ teacher!
March 3rd, 2010 at 2:12 am
u explained stuff …
u explained stuff better than my teacher .. can u please explain the Liquidity trap, Animal Spirit and crowding out?
March 3rd, 2010 at 2:12 am
Beautiful place, …
Beautiful place, Greece. I can see why you’d move there. The atmosphere is just wonderful.
Another top video, gotta try and incorporate the multiplier effect into a 4000 word essay. Your videos never let me down!
March 3rd, 2010 at 2:12 am
i wish you had …
i wish you had shown what happens PC/MPRF diagram when government implement monetary expansion and what happen to PC/MPRF diagram when government implement a monetary contradiction.I have assignment and have to answer these two questions in 2 days.
March 3rd, 2010 at 2:12 am
Hope you’ll add …
Hope you’ll add more vidio topics here, i like how you make economics easier to understand…thanks!
March 3rd, 2010 at 2:12 am
Although I am a …
Although I am a Londoner, I live and teach in Athens, Greece.
March 3rd, 2010 at 2:12 am
Do you teach …
Do you teach professionally in London? Which Colloge please?