Circular flow of income and expenditures | Macroeconomics | Khan Academy

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Basic introduction to what microeconomics and macroeconomics study. A bit on Adam Smith.
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Macroeconomics on Khan Academy: Topics covered in a traditional college level introductory macroeconomics course
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[@emmalyngrace5978]

Right after he corrected himself for saying months instead of years, he immediately said months again 😂

[@keb990]

I had to rewind lmao.. like wutt

[@Christopher4700]

this guy on that island has some serious issues

[@vietnguyenc6612]

mentally, right?

[@xios1515]

#Theguyontheislandthathasmentalissues

[@digitalcommuneeconomicsphi6149]

@@xios1515 lol

[@reasonerenlightened2456]

Did you notice how the humans are just things in this model, a property. Are you a property? Both 'households' and 'Firms' are owned by humans therefore the correct categories must be between owners and employees (i.e. non-owners). !*** There is the owner and the employee.*** The entire model of 'Circular flow of money and a Simple Economy' is a blunt distortions of reality, Fake thinking A lie or an extraordinary example of poor reasoning which has penetrated deep in our education, and the way we think think about the society. The box for 'Firms' is conjured on the assumption that 'Firms' are somehow qualitatively different than any other article of Property. A Firm is exactly the same as a toaster, or a washing machine, or an oven or any other article of Property with a function, and it does not matter if the toaster, the washing machine, the oven, etc use electricity or a bunch of human-people must run around all day collecting wood, maintaining fire, toasting, baking or washing all by hand to achieve the same result. Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day. Firms are just property and should be treated as such by the laws. Therefore the entire premise of the diagram is based on a False reasoning. It is scary to realise the extent of penetration of the immoral reasoning on which the 'Circular Flow of Income Diagram' is based. Humans as property!!! We must stop and rethink, do we wish to continue using the model on which the diagram is based. As I said, Ultimately, the 'Employee' makes the products, takes those products to the market, sells the same products, he made, to himself and finally he pays a fee known as Profit to some 'Owner' for a permission to own the same products he made and sold to himself. The owner gets to collect profit for doing nothing.....and many call that 'earning' instead of 'taking'. The way forward to a better society is to increase and maintain a strong minimum purchasing power of the end-consumer using the magic formula. (Magic Formula: 'Your minimum Purchasing Power' = 'minimum wage' + 'Benefits payments' - 'Cost of dignified living from cradle to grave' - 'Taxes, fees, penalties') Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day. Firms are just property and should be treated as such by the laws. Save the minimum purchasing power of the human citizens instead of saving businesses/firms.

[@cheychi4633]

😂😂

[@juanartiles5454]

this one is a little confusing because of the one dude

[@EraserFS]

+Juan Artiles But it is an accurate representation of the actual principle, no matter the scale of people participating in this process. The income of 7 billion people is also the expenditure and revenue of 7 billion people. Necessarily because it is an identity / the same thing viewed from 3 different perspectives.

[@aisyahAAZ]

haha

[@nita_khajum_limbu]

😂

[@ouranoswealthgroup7042]

That's why it shouldn't be confusing. The lie is that you need anyone to CREATE your life, on purpose. Communities (of other people) are suppose to be BONUS, not re-LIABLE. If you create your own first, this is exactly what it looks and sounds like.... he doesn't even need employees. SELF-DETERMINATION gets it done and done. So, if he did INVEST in employees, he wouldn't treat them like slaves because he already knows how to recycle his initial INCENTIVE which is himself generating all sorts of income, as the co-creator.

[@mc2gregory]

I liked this one a lot; it helped me apprecite a different view of our actual economy, where the beginning premise is that we're all pretty much in this together.

[@Vanessa-zi4og]

Thanks a lot!! I have only just started on this for MacroEconomics... great start for me.

[@Ana0.0]

simply wow!!!! amazing way to explain this! I don't know how much my teacher explain this to me it did not enter in my head... it seems quiet simple but when it comes from questions I do not know how to apply this maybe this will help me in my next exam! thankyouuu so much! it is still helpfull these days since I saw a comment was made 10 years ago!!

[@kylestail]

Brilliant example to explain this. I appreciate it. Thanks.

[@indianarchangel]

Just enrolled for an Econ course and I was not understanding anything until I came across your videos. Thank you so much! Love from Hyderabad, India.

[@milkchocolateboombox7845]

man my Econ teacher just made us spend 8 minutes watching this with all of the lights off and then was upset people were sleeping

[@reasonerenlightened2456]

================= The entire model is a lie. =============== ==========< There is the owner and the employee.>========== Ultimately, the 'Employee' makes the products, takes those products to the market, sells the same products, he made, to himself and finally he pays a fee known as Profit to some 'Owner' for a permission to own the same products he made and sold to himself. The owner gets to collect profit for doing nothing.....and many call that 'earning' instead of 'taking'. The way forward to a better society is to increase and maintain a strong minimum purchasing power of the end-consumer using the magic formula. (Magic Formula: 'Your minimum Purchasing Power' = 'minimum wage' + 'Benefits payments' - 'Cost of dignified living from cradle to grave' - 'Taxes, fees, penalties') Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day. Firms are just property and should be treated as such by the laws. Save the minimum purchasing power of the human citizens instead of saving businesses/firms.

[@ouranoswealthgroup7042]

It's the total set up. you better clap on, next time! U need this class, especially if you're a young person. I'm back like i never left from 23 years ago, and it makes WAY more sense this time around.

[@reasonerenlightened2456]

@@ouranoswealthgroup7042 Did you notice how the humans are just things in this model, a property. Are you a property? Both 'households' and 'Firms' are owned by humans therefore the correct categories must be between owners and employees (i.e. non-owners). !*** There is the owner and the employee.*** The entire model of 'Circular flow of money and a Simple Economy' is a blunt distortions of reality, Fake thinking A lie or an extraordinary example of poor reasoning which has penetrated deep in our education, and the way we think think about the society. The box for 'Firms' is conjured on the assumption that 'Firms' are somehow qualitatively different than any other article of Property. A Firm is exactly the same as a toaster, or a washing machine, or an oven or any other article of Property with a function, and it does not matter if the toaster, the washing machine, the oven, etc use electricity or a bunch of human-people must run around all day collecting wood, maintaining fire, toasting, baking or washing all by hand to achieve the same result. Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day. Firms are just property and should be treated as such by the laws. Therefore the entire premise of the diagram is based on a False reasoning. It is scary to realise the extent of penetration, in the minds and the education, of the false reasoning on which the 'Circular Flow of Income Diagram' is based. We must stop and rethink, do we wish to continue using the model on which the diagram is based. As I said, Ultimately, the 'Employee' makes the products, takes those products to the market, sells the same products, he made, to himself and finally he pays a fee known as Profit to some 'Owner' for a permission to own the same products he made and sold to himself. The owner gets to collect profit for doing nothing.....and many call that 'earning' instead of 'taking'. The way forward to a better society is to increase and maintain a strong minimum purchasing power of the end-consumer using the magic formula. (Magic Formula: 'Your minimum Purchasing Power' = 'minimum wage' + 'Benefits payments' - 'Cost of dignified living from cradle to grave' - 'Taxes, fees, penalties') Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day. Firms are just property and should be treated as such by the laws. Save the minimum purchasing power of the human citizens instead of saving businesses/firms.

[@engchoontan8483]

I hint and suggest and insinuate and propose and indicate and ... = old school and modern things people missed out while shopping Thanks to you, you kept the economy going by macroEconomics. Different class segments, different educational levels, different skill levels... many type-circle-rings of macroEconomics.

[@intellegence63smart]

100% on my Exam, thanks Khan!

[@tripleabdinho2710]

Hello👋

[@lf9147]

Good way of explaining it. Harder to understand with one man, but at the same time, if you do get it, you'll kinda get the material.

[@mohammadrezaee873]

Thank you so much for helping.Its reallyy useful

[@yashbhardwaj3499]

life savior vid ... thanks a lot from India :-) :-)

[@khanacademy]

@AnalyticalInsanity every year

[@timurumarov8282]

Amazing videos! very helpful. Thanks)

[@sudiprijal9968]

It was very helpful , thanks .

[@naufalfawwaz7305]

Thanks a lot! From Indonesia!

[@zhixian4251]

this vid is simply amazing.

[@XxHamletJacobsXx2022]

God bless you Khan!!

[@sabaa8385]

I want more of this island guy what’s he up to

[@KumarAadarsh]

Thank you khan academy!

[@travisvo8497]

Am I the only one here who is confused? :c

[@friedlemons5201]

No

[@RaseditsNathium]

perfect explanation

[@jonvo9534]

So this guy gets capital from himself, has his own firm, his own economy, and pays himself rent?

[@navyajyotsna9617]

Jon vo lol

[@onlinemall7288]

That's me.. Lol

[@ryanwong7426]

yes

[@parmindersinghraj7424]

amazing video!

[@ouranoswealthgroup7042]

Omg, you totally explain MY eco system. This is it! It's been hidden in the two most difficult classes for me all along -- micro econ and accounting (both mathematics focused), because I would shut down my rational brain too often and teachers didn't know how to teach me. :) Econ and Accounting. I ALMOST want to go back to school for a Business degree while running my businesses, but I think i'll just keep watching your academy videos and walking the path in trial by fire! It's starting to feel natural and i'm starting to trust myself like I didn't back then! Amazing breakdown... I swear I saw it just like this in my mind --- all revenue in, no revenue out, tax-exempted entities only!

[@saharshverma7026]

ok

[@ninavanwyk7042]

Thank you

[@funwithanshupathak]

great explanation

[@martijn.martens]

Thanks a lot!!

[@radiumrk]

Well Explained

[@jckgoldness]

thx i have a test on monday that covers this

[@TheTrainIsCominggggg]

NO WAY! awesome!

[@kelvingomez929]

Master Roshi from Dragonball lol

[@eff700]

please: MORE... MORE... MORE!!

[@DistributistHound]

This shows mainly the economic part of the flow but partially the financial part of it. How does money flow theory and the banking systems fits here?

[@mazda9175]

I don't get how people love or understand Khan Academy...

[@mariaestrada3683]

Bruh

[@mona-checkoutmychannel7656]

So, see the business as its own "person"(entity) and the relationship is always 100% equal and mutual because a business cannot exist without people, and people need the businesses to exist... (people provide for the business and the business provides for the people) well that's how I'm gonna remember it lol

[@mona-checkoutmychannel7656]

You can also think of it as being an employee for a company and then going there after work to shop. The money just keeps going back and forth in a circle

[@peterlundwe5848]

thanks

[@thomasmcgraw8778]

the thought in the back of my mind that kept making this so much harder to understand is "uhhh wait no one's actually paying anyone. it's him paying himself for his own stuff."

[@italiansoutherner]

My professor explains that households give "consumer expenditure" to the product market and taxes to the feds. Nothing about factors of production to firms. :/

[@user-jt9fi2kl6n]

You need two people to start an economy. The one person makes it confusing.

[@goodnewsernest126]

This one guy thing makes it very complicated for me

[@MrOJproductions]

Someone explain what Quesnays version of this is

[@zhiyuanli7413]

Wow is it explains why there are three definitions of GDP? Interesting ...

[@DondeEstaVee]

Why now!!! MY EXAM WAS YESTERDAY!!! WHY IS THIS POSTED NOW!!!

[@skulker5805]

ha 90s kids

[@prashantgarg2098]

Factors of production are a Kind of services so why dont they count up in calculating GDP

[@olasving1]

@AnalyticalInsanity Most probably every year, as that's what he said in the beginning and often throughout the video.

[@denzelcounts7036]

Introduce taxes into this scenario and now no one can afford anything lol 😂

[@soulreaperichig0]

Corrupt bureaucracy in a nutshell

[@ethergaming2665]

I am not able to understand rent..how firm provides him shelter??

[@cagataygulcan4411]

Hey, in this video doesn't work subtitle. (Turkish)

[@quezellevanschalkwyk5889]

So the the household also pay rent to the firm and the firm to the house hold im really struggling here

[@BurkeyAcademy]

Khan- you might want to move the MACRO videos to a playlist called MACRO, instead of including the in the micro playlist.

[@gamingdevil204]

That dude need to think formally about survival 😂🤣

[@shibinshibin8365]

Good help me

[@haroldh6678]

honestly confused about the concept of a "household". When you live in a city with millions of "households" how does that play into effect with firms? I don't see the correlation of my house and the firms out in the city or is it some crazy network?

[@blast2686]

This is just an hypothetical example

[@santoshsapkota7858]

I wanted a four sector i can do better expalaination than this on 2 sector

[@thomaschindende5242]

santosh sapkota did you get the 4 sector model

[@Oxcilic]

is this assuming the household will spend 100% of its income on goods and services?

[@paulvandal4444]

Yes, unless you want to discuss the banking loop in which the owner/householder saves some small sum he inturn lends to the firm and receives interest.

[@smokinacez3258]

Confusing

[@DistributistHound]

Then the banks show up start lending money, for new production whose money? Theirs why? because there was only 3500 and if households multiply, production should increase accordingly therefore more money is needed and some time later what was a self liquidating economy has become an inflationary and deflationary system because banks only lend and never give free money to reflect the value of a circular economy.

[@HL-iw1du]

he’s paying rent to himself?

[@JC6659]

I was understanding things until 6:30. Got lost by then.

[@camelCaseFTW]

abbreviate? or forgot how to spell entrepreneurship? :D (jokes)

[@ashar4121]

Maybe you don't believe me sir, but I in fact, am the whole economy here. ---A guy who rent a house from himself buy crops which he grows it himself on land which he rents to himself and earns a profit out of himself

[@RayLRhodes]

Sal is an INTP.

[@Aamirrockin]

bro 4 sector flow

[@chelsyrobinson680]

This video really confused me ... can you do another with more than one man...

[@PuudingMusic]

Anyone know this American comedy group called The Lonely Island

[@aruzhansabitkyzy1168]

why the other majors are more interesting than mine hahaha( i am doing cs degree)

[@pratishamushyaju3800]

how to get subtitles for this video

[@maheshrathi37]

pratisha mushyaju by clicking on cc button

[@FourFourTwoYC]

why is he paying for his own shelter

[@onlinemall7288]

?????????? What the hell............

[@EmilianoLeopoldino]

Oversimplified...

[@philippessle5030]

***** boa milho!

[@EmilianoLeopoldino]

MORTO Q VC ME ACHOU AQUI Philipp Essle​

[@Jemimakl]

hi econ2123

[@salsabilchy2556]

6:31 holy shit thank me later

[@digitalcommuneeconomicsphi6149]

His own house and his own firm and he self sell buy etc etc etc...

[@blast2686]

It’s just an hypothetical example

[@kylepolizotto2539]

So many problems with this video :( The building should be categorized as Capital, whose income is called "Interest" (not Land=Rent) Also, if we are only concerned about "money coming out of this business" that would be Accounting Profit, not Economic Profit. More errors than time to write.

[@geminix365]

Are you kidding

[@travisvo8497]

Is he working then paying himself his own money?

[@lawentahar3730]

+Travis Vo no, households works for firms and firms give the households income which they can use to spend basically imagine yourself working for a boss, they give you income, say £20 every hour. You can then use your money that you gained from working to spend on goods. Thats basically the circular flow. households gain income and households spend the income they gained. Households as in people that work.

[@dophie1557]

Travis Vo yeah...I think the fact that he used the same guy as the household and the firm makes it confusing...

[@maxrb67]

why do I feel like you are talking to like I am dumb?

[@RayLRhodes]

What does that have to do with my comment?

[@guyoflife]

This is confusing. So he owns a firm and is paying rent to himself and confusing confusion? Isnt there a less confusing way this could be broken down?

[@yp06407012]

what happens when he gets married....???

[@Frenk33]

The entire model is a lie. There is the owner and the employee. Ultimately, the 'Employee' makes the products, takes those products to the market, sells the same products, he made, to himself and finally he pays a fee known as Profit to some 'Owner' for a permission to own the same products he made and sold to himself. The owner gets to collect profit for doing nothing.....and many call that 'earning' instead of 'taking'. The way forward to a better society is to increase and maintain a strong minimum purchasing power of the end-consumer using the magic formula. (Magic Formula: 'Your minimum Purchasing Power' = 'minimum wage' + 'Benefits payments' - 'Cost of dignified living from cradle to grave' - 'Taxes, fees, penalties') Firms are no more "legal entities" than your back-up power generator is a "legal entity", and it does not matter if it runs on fossil fuels or if a bunch of humans must run on treadmills all day. Firms are just property and should be treated as such by the laws. Save the minimum purchasing power of the human citizens instead of saving businesses/firms.

[@jayp6955]

This is a very poor example.

[@ifeanyiibeanu7765]

Worst deal ever!!!!!!!