Sir your videos are the reason iam capable to do exams with 10 grades. Idk how you have it in USA, here 10 is like a A plus. Masive respect for your videos. I will share them in our fb study group.
Thank you Sal. I never knew Economics would be so interesting. *sigh* I can study it in school because I'm in grade 11. You can turn any dry subject and turn it into a fun video game like subject. Thank you so much
just so to figure out the price of money today, fed interest rates are 0- 0,25%... the money is worthless folks =) Commercial Banks have no initiative to lend. Instead they are just getting paid by central banks for having and excess reserve currency held on hand. The market is dead. Respect for the video. Very educating and simply explained. Respect for your teaching talent!
This and future videos are not in the core finance playlist on khan academy itself KHAN ACADEMY ROCKS! Sal, Please do more videos on Python, Pygame and other programming laungadges
Yeah, I didn't say that there is anything wrong with the slope (or curve, or anything you call the demand line). He said on 5:40 - 5.48: "People are willing to pay excess of 30% for those first few dollars and as there are more and more dollars, the incremental next borrower get less marginal benefit from it". That's what I think is illogical way to explain the curve/slope/demand line.
@chocomalk by lowering interest rate (buying government securities) the demand curve shifts... at least that is the idea. It is not always the case, but in a perfect, ideal world that is what would happen.
You might be confusing the concepts of marginal cost and supply. Money doesn't have marginal cost when you're the one lending it. Lending $1,000 costs the same as lending $100,000; it is perfectly elastic. There is no point where lending more money in a perfectly competitive market leads to smaller profit. Your supply and demand curves follow the logic of treating money like any other good, which is correct, but the explanation given seems to imply something different.
Well if you look at the curve you see that way up around 30% the demand for money is really low, about less than 1 billion. As you go down to like 10% you'll see the demand for money becomes a lot more almost 3 billion which is very logical
But my textbook says the following: Increase in the rate of money growth (i.e. Feds creating more money) causes a percent increase in the rate of inflation according to the basic Quantity Theory of Money. And according to the Fisher Equation, a percent increase in the rate of inflation in turn causes a percent increase in the nominal interest rate. But according to the video, an increase in money supply decreases the interest rate. So WHO IS RIGHT?
The way he explains the slope of the Demand (minute 5:41) confused the heck out of me. Why would people be willing to pay 30% to borrow a few dollars? That makes no sense. It should be reversed, if the interest rate is 30%, people can't afford to borrow too much, to the quantity is only a few dollars. At 5:45 declining marginal utility might apply to goods, but to money?... Yeah it makes no difference to the slope. Strange explanations though.
