3 Demand and Supply of Money Videos-I

Why do people demand money? They demand money because they have to make transactions, they demand money because they have to keep some reserve for emergencies, and they also demand money for speculative purposes. We discuss these in detail in our videos.

Then, we derive downward sloping demand curve of money. Demand for money is drawn in interest rate and quantity demanded of money space.

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3 Tax Multiplier Concepts

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In our earlier videos, we have seen, first, very generally, how any change in autonomous demand shifts aggregate demand, then , secondly, we saw specifically, how a change in government spending affects aggregate demand and how do you calculate government expenditure multiplier and now, we will look into the effects of a change in lumpsum tax and its affect on aggregate demand.

More specifically, we will cover following three issues in this series

How does the reduction in lump sum tax affects aggregate demand?
How do you calculate taxation multiplier?
Numerical example to calculate taxation multiplier Continue reading →

3 Government expenditure Multiplier videos

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These three videos explain the process of affecting aggregate demand using government expenditure multiplier. If government expenditure is increased then how the total demand/output in the economy is affected? This is much similar to our previous blog post, the only difference being, it tackles the issue of government expenditure specifically.

This series of videos discusses following issues related to government expenditure

How an increase in government expenditure affects output?
How to calculate government expenditure multiplier? How can it be depicted graphically?
If an economy is placed at less than full employment level, then how government expenditure multiplier can be used to put an economy back to the full employment level?

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2 Money and Inflation questions

What is money? Money is generally accepted as payment for goods and services. Then we discuss what are the main functions of money. There are four main functions of money : a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment.

In the next video, we explain, what is the relation between money and inflation.

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3 Concepts related to Unemployment

In these videos, we have defined several key terms related to unemployment such as labour force participation rate, when is person considered as unemployed. Any person is said to be unemployed, loosely speaking, if he is actively seeking work for sometime (at least four weeks) and unable to find any job. The labor force participation is the number of persons who are employed and unemployed both. We learn how to calculate labour force participation rate.

Then, we discuss what the relation between output fluctuations and unemployment is? In case of an economic boom, unemployment falls and in case of recession, unemployment rises. What is this relation called?

Lastly in this series of videos, we define what is termed as natural rate of unemployment. Continue reading →

3 Aggregate demand and Multiplier fundas

What is Aggregate demand? Aggregate demand is the sum total of demand by all sectors in an economy, namely, consumers, firms, government, foreigners. In these videos, we explain, how do depict aggregate demand graphically, where does the equilibrium in an economy lies? What is an autonomous part of aggregate demand?

If an economy is given a shock, in terms of either increase in government spending or an increase in autonomous investment or fall in taxes or an increase in money supply, then how does aggregate demand curve shifts?

Lastly, we discuss, why total increase in income is more than the initial shock (in terms of above discussed factors). This is explained by Multiplier process. What is multiplier? How is it derived? Hoe is the process of multiplier is depicted on a diagram? Continue reading →

6 GDP deflator and related issues

This series of videos is in continuation of last GDP concepts series. It starts with very simple example of questions asking whether following items are included in GDP or not. I will be making more videos about this later, asking several items are included in GDP or not. Here, I wanted to give just a start to the topic, so just three examples.

Other videos discuss some other useful concepts, such as, GDP deflator and Consumer price index. GDP deflator measures the level of prices of all new, domestically produced, final goods and services in an economy. It is calculated as a measure of nominal GDP to real GDP. We provide an example so that you can calculate inflation using GDP deflator or consumer price index. Lastly we discuss, shortcomings of using GDP, GDP deflator and Consumer price index.

Please ask questions in comments sections. I hope these videos are useful to you…. Continue reading →

5 Gross Domestic Product (GDP) concepts

These videos are stepping stones in basic macroeconomics. In the first class of macroeconomics, we should know what is gross domestic product, how is it different from gross national product.

Gross domestic product is the value of all goods and services produced in an economy during a given time period. By whom? By its own nationals and foreigners in its own economy. Gross National product is the value of all goods and services produced by economy’s residents in country’s own territory and foreign lands, during a given time period. Continue reading →