Macro February 22, 2017

Injections and leakages in the circular flow. Savings as leakages from the circular flow. Savings/leakages increase when interest rates increase (more incentive to save); borrowing (called ‘Investment’ by businesses) increases when interest rates decrease (more expensive to borrow). In the Classical model, leakages will always equal injections because interest rates will be flexible and will adjust as necessary.
Some businesses are discovering that paying the minimum wages isn’t necessary the best idea - higher wages sometimes increase productivity.
However, over the past 35 years, many businesses have focused on increasing profits by decreasing wages, not growing revenues. Some speculate that this has slowed growth in the US by decreasing the growth in purchasing power.
Adam Smith’s 3 roles for government and their rationale.
The argument that ‘ceteris paribus’ ‘ain’t.’
Discussing the ‘tradeoff between inflation and unemployment’ and 3 AS/AD graphs to explain Classical, Keynesian, and a ‘more realistic’ AS curve and the policy implications thereof. Why prices, wage costs, interest rates increase as the economy nears full employment.
The Phillips Curve to illustrate the tradeoff between unemployment and inflation.
The economic costs of high rates of imprisonment/incarceration in the US.
The economics of legalizing marijuana. The dangers of selling it legally but taxing it heavily.
Borrowing money at a fixed rate of interest in times of rising inflation.
New Trump appointee McMasters and his book, Dereliction of Duty.
3 assumptions behind Classical economics. Say’s Law explained. Other assumptions we have seen before. Keynes’ ‘refutation’ of these assumptions.
What creates jobs, … businesses or customers? Does supply create demand, … or does demand create supply? The background to supply side economics

[@kiranbhalshankar765]

I have been watching your videos since 2013 and have found them very educating. THANK YOU

[@Bennett_556]

Unrelated to this topic, but in your professional opinion do you conclude that either keynesian economics or classical economics is better for the economy as a whole? I would much appreciate an response thank you in advance

[@TheWyvern66]

Sorry for the delay - as in most economics, I don't think it's either/or, but rather choosing from both. We need free markets and their incentives, but they cannot operate unfettered - too many costs. I like Keynes because of his emphasis that it's the demand side that drives growth - not just giving breaks to businesses/the supply side.

[@Bennett_556]

Okay thank you very much