Macroeconomics Unit 3 COMPLETE Summary - National Income and Price Level

[@stephaniecastro9200]

Thank you!! You literally just taught me the whole unit so easy and to the point! Ready for my unit test next class!

[@ReviewEcon]

You're welcome! I am glad it helped. Good luck with your unit test!

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WAIT TRUE

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This channel is going to be the reason I pass my econ exams.

[@ReviewEcon]

Good luck!

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who up cramming

[@ReviewEcon]

Smart people! :-)

[@graham8643]

This is the only video of this whole unit I could find, and man it was worth the hour and a half of rewinding to understand and take notes. Thank you!

[@ReviewEcon]

You're very welcome. I have a complete video for every unit, I hope the rest are just as helpful! Good luck with your exams!

[@LeoChen-v6z]

Holy moly!! this channel is honetly underrated, those full summary videos are what is helping me pass my exams!!! helps me undersstand the concepts and rather than bombarding with equations. thankyou!

[@ReviewEcon]

You're very welcome! Good luck with those exams!

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You ARE the reason I am able to understand Macro and getting me through the semester! God bless you, I hope you hit the powerball. I will be returning when I take Micro next semester! THANK YOU!!!

[@ReviewEcon]

So glad to know my videos helped you! Good luck with the rest of this term and micro next term!!

[@ashishronak5774]

You are the main reason why I do so good on the my ECON Tests. I really appreciate you making it so easy to understand. Continue to do what works for you.

[@ReviewEcon]

You're very welcome! Good luck on your next test!!

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Thank you! This was so helpful

[@ReviewEcon]

I am so glad. 😀 You're very welcome!

[@sukhmansidhu4453]

A literal godsend! Thank you so much for helping me review macro for the ap exam after a semester gap!

[@ReviewEcon]

You're welcome! Good luck on your exams!

[@natecanonico1545]

Hey how was your day? Taking the macro test tomorrow, wish me luck! Thank you for everything

[@ReviewEcon]

My day is going great! Good luck tomorrow! 😄

[@ReviewEcon]

The AP macro exam is on Friday, but lots of colleges are starting Finals.

[@alterego7305]

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[@ReviewEcon]

You're very welcome!

[@mazinsaleh3489]

Every summary is so helpful every time

[@ReviewEcon]

Awesome! Thank you!

[@cocoodb7697]

🐐 he’s like my teacher but good at his job

[@ReviewEcon]

Sometimes it just takes someone saying in a slightly different way for it to make sense. Good luck on your exams!

[@Lana-or5dz]

Glad!!! I found these videos. I Currently have a low C need to maintain it to pass this class and finally move on .. Thank you so much for providing these videos they truly help with giving you a better understanding on the material because when I be reading them textbooks 📚 I don’t be retaining or knowing what the hell I’m reading .. once Again thank you! I truly do appreciate all your videos.

[@ReviewEcon]

You're very welcome! Good luck with the rest of the class!!

[@hackingchampion]

After 2 years, this video is still maintaining the demand

[@ReviewEcon]

🤘😎😅

[@kiantaewebbfan5028]

You deserve more subs, you’ve helped me out so much. Thanks 👍

[@ReviewEcon]

They're coming slowly. 😉 Thank you and you're welcome!

[@allonbluvshteyn43]

You said that in during an nflationary gap the LRAS shows that there is low unemployment. Using the phillip's curve we know that low unemployment means that there is high inflation. Therefore, at 11:52 in the video wouldn't aggregate demand shift left as consumption decreases due to the high inflation and thus bringing PL2 below PL1 as Y1 approaches Yf?

[@ReviewEcon]

There is less real GDP, but it's due to the leftward shift of the SRAS. Wage changes are the driving force. That's the self correction you need to know in the AP exam. Good luck!

[@allonbluvshteyn43]

@@ReviewEcon Thank you!

[@louis7428]

11:53 Do wages rise as in, "real" wages? How/Why do they rise?

[@ReviewEcon]

It's actually nominal wages that rise (real may or may not rise depending on how much inflation there is when SRAS shifts left). They rise because people are being overworked when we have an inflationary gap. Workers without jobs are few and employers are having a tough time finding workers. Workers therefore have power to demand higher wages for their extra work and those higher wages cause the leftward shift of the short run aggregate supply curve.

[@joosh7380]

In ReviewEcon we trust 🙏🙏🙏

[@ReviewEcon]

Aw! Thank you! Good luck with your studies!

[@friederichostertag1666]

very helpful,, thank you!

[@ReviewEcon]

Awesome! And you're welcome!

[@so.phiaaa]

At 14:18, did you mean to say the during contractions, transfer payments increase because more people are unemployed not fewer?

[@ReviewEcon]

It's a bit hard to hear but I say fewer both times "fewer employed" during contractions and "fewer unemployed" during expansions. Good luck!

[@Bizzy-r9l]

Thanks for the videos, I told my friends about them

[@ReviewEcon]

Thank you! Good luck on your exams!

[@anniezhang347]

can you explain again why the tax multiplier is one less than the spending multiplier? 3:34 because isn't some of the money saved with the spending multiplier too, like when you saved .2 of your new 1000?

[@ReviewEcon]

Yes! When the government spends $1000, all of that spending is immediately counted in GDP (government purchases). When the government reduces taxes by $1000, that tax reduction is not immediately counted in GDP because there was no immediate spending. The first spending with a tax decrease will be by consumers minus any savings (with an MPC of .8 it would be $800). That same amount is the second round of spending with an increase in government spending. As a result tax decreases have a smaller multiplier than spending increases (by a factor of 1). On the AP macro exam, the rubrics explain it as something like "when taxes are decreased, some of the decrease is saved rather than spent."

[@dolfinw4179]

I got a 5 on micro last year because of you, now coming back to get a 5 on macro! Could you elaborate what does "wages and other resource prices are sticky in the short run"?

[@ReviewEcon]

Awesome! Welcome back! Sticky is the technical term (sticky is not on the exam) for the fact that wages (and other resource prices) are slow to adjust to economic conditions like changes in the price level. While you don't need to know sticky, you need to know wages and other resource prices are fixed in the short run and flexible in the long run. I hope that helps!

[@dolfinw4179]

@@ReviewEcon Alright thanks! One more question: does changing discount rate or reserve requirement shift the money supply just like buying and selling bonds?

[@Jessicabnnnn]

Honestly thank you so much!

[@ReviewEcon]

You're very welcome!

[@jackriley713]

I appreciate the video. One question. You mentioned that if oil prices decrease there will be a negative SRAS shock leading to stagnation. Wouldn’t it be the opposite? If oil prices fall wouldn’t the input cost for business go down leading to a rightward shift in the SRAS resulting in an inflationary gap?

[@rael5333]

correct

[@ReviewEcon]

I'll have to check and see if I mispoke. If I did, you are correct. Oil prices fall is a rightward SRAS shift, oil prices rise is a leftward SRAS shift.

[@katherinewang6230]

Hi, I have a question at the end of the video where you talk about transfer payments in automatic stabilizers. it should be an increase during expansions or a decrease during expansions. I thought it would be an increase because in a recessionary gap there is higher unemployment, so more people need the unemployment compensation. Thank you!

[@ReviewEcon]

Automatic stabilizers are anything that increases the budget deficit during a contraction, and decrease the budget deficit during an expansion. Taxes automatically decrease during a recession and increase during an expansion. Transfer payments, like unemployment, increase during contractions and decrease during expansions.

[@katherinewang6230]

@@ReviewEcon Sorry... I understand the first part (Taxes), but not the transfer payments. What increase is the amount of money that the person received or ..... ?

[@ReviewEcon]

Transfer payments are payments to citizens from the government, like social security, disability, welfare payment, and unemployment compensation. Welfare payments and unemployment compensation are automatic stabilizers. When we have a recession, more people are unemployed and more people qualify for public assistance. As a result, the government spends more money providing welfare payments and unemployment compensation during recessions.

[@ReviewEcon]

So more people getting paid from the government when there is a recession means more total money spent automatically.

[@katherinewang6230]

Got it. so it means that the government spent more during the recession gap (increasing its payments), but would that mean there should be an increase during expansions (your notes said decrease during expansions)? because expansion policy is used to fix the recession gap. Thank you for much for helping me, hope that won't bother you and my questions may seem stupid.

[@akhilkaturi7937]

You made a mistake. When you gave examples about Positive SRAS shocks and Negative SRAS shocks, you said the examples were when there was a sudden decrease in oil prices. Which one assumes an increase in oil prices and which one assumes a decrease? Somewhere around 10:57

[@ReviewEcon]

Good catch! I'll have to fix that and upload a new version (might take a bit though). It should be an increase in oil prices cause a negative SRAS shock (leftward shift) and a decrease in oil prices cause a positive SRAS shock (rightward shift). Thank you!

[@akhilkaturi7937]

@@ReviewEcon Awesome thanks! Great video though keep up the good work!

[@ReviewEcon]

It will be a bit before I have time to re-record, so I edited my error out. Somewhat awkward cut, but at least I won't lead students astray. Thanks again!

[@GraceOwens-wd2nb]

You might just be the reason I don't make another 30% on my macronimics test. I wish I found these videos sooner😅

[@ReviewEcon]

Happy to help! And good luck on your next test!

[@GraceOwens-wd2nb]

@ReviewEcon Update, finished it, still failed with a 26%. I don't know why I can't get this stuff to stick in my head. My teacher is going to kill me...

[@ReviewEcon]

@GraceOwens-wd2nb 😢 Bummer! I'm sorry! There are extra review materials and practice games in ReviewEcon.com that may help. I wish you the very best of luck!

[@wahjergah4543]

Thanks for this--it was really helpful, but I have a quick question. If, in inflationary fiscal policy, if you were to increase government spending (increase GDP) and also decrease taxes, why would decreasing taxes (therefore getting more money in people's pockets and letting them spend more), not cancel or overpower the effect on GDP that government spending would have (especially considering that consumer spending has a higher impact on GDP than government spending does)? Thanks for your help! EDIT: Whoops, didn't think this all the way through--if you cut taxes that would increase spending and therefore increase GDP anyway. Regardless, thank you so much for your help!

[@ReviewEcon]

Remember taxes and spending are entirely separate. Governments can change one without changing the other. The difference between the two is the budget deficit (or surplus). Expansionary fiscal policy (used to fight unemployment and close recessionary gap) is cutting taxes and/or decreasing spending. Cutting taxes increases gross investment and consumption, increasing government spending increases government purchases. Both of those shift AD to the right. Good luck on your exams!

[@kimiisun0]

Super helpful!!

[@ReviewEcon]

Awesome! I'm glad you found it helpful!

[@MorbidGalaxy]

Thank you ❤

[@ReviewEcon]

You're very welcome!

[@andrewsuh1019]

Hi, I have a question. For a negative supply shock, wouldn't that be caused by an increase in oil prices as it makes producing more expensive?

[@rael5333]

correct

[@ReviewEcon]

I'll have to check and see if I mispoke. If I did, you are correct. Oil prices fall is a rightward SRAS shift, oil prices rise is a leftward SRAS shift.

[@NazlıÜstündağ-r1y]

is SRAS and LRAS same as IS and LM curves?

[@ReviewEcon]

They are not. IS/LM is a different model and one that is not covered by the AP Macro exam or CLEP macro exam (the focus of this channel). There are a lot of videos about IS/LM on KZbin though. Here is one of them kzbin.info/www/bejne/bYC7i6F7fK2Ja6ssi=GITuGahpkhWF6osm Good luck!

[@genericuser-1]

Good man

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Thank you!

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I love you

[@ReviewEcon]

Aw! That's so sweet., but Economics is already my Valentine. 😅

[@zacharyalterman5373]

goat

[@ReviewEcon]

That is very kind. Thank you! Good luck on your exams!

[@Bizzy-r9l]

You should make KZbin shorts, my attention span is so bad

[@ReviewEcon]

I may at some point. 😄

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[@ReviewEcon]

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