MPC and multiplier | Macroeconomics | Khan Academy 

How was your exam? Did it go well? You probably dont remember it by now but mine is tomorrow lol

​​@ceylintellioglu how did urs go lol mines in 3 weeks

Dude, I've always wondered that too! Someone please answer!

khanacademy.desk.com/customer/portal/articles/329318-what-software-program-equipment-is-used-to-make-khan-academy-videos-

He is probably using some kind of drawing tablet

When using the calculator, the way the cursor moves looks like he’s using a mouse

We are counting here the value of output.... I agree 1000 dollar is bieng used back and forth but the output is increasing after every transaction. And that how economy works.

If I give you 1000 dollars and then you give me the same 1000 dollars, that's an output of 2500 dollars

When farmer gives $1000, the builder builds something worth $1000 for the farmer. So output=$1000 Then the builder buys goods worth $600 from the farmer. So output=$600 The output is already 1000+600=$1600 This goes on and in the end $2500 worth of goods are produced as a result of injecting $1000. I'm pretty late and it may not help you but perhaps it'll help others.

Yes omg I’ve been wondering this same exact thing for so long I need it answered. I’m pretty sure it’s money that’s already in circulation on top of the new injection of money

How did your exams go (12 years later 😂)

This.

thank you

+Nicolas van Hell Keynes' "multipliers" are for spending INCREMENTS, deltas. Here are Keynes' original 2 equations, with ΔI = $1: 1) ΔY = ΔC + ΔI 1 = 0 + 1 2) ΔY = k x ΔI 0 = k x 0 [Start at delta zero] 0 = 0 [Multiply before adding] 1 = 1 [Add $1 ΔI] With LEGAL math, both equations give the same result. If you put a value for ΔI before multiplying, you've done illegal math. P-E-MD-AS P-E-MD-increments P-E-MD-deltas You can't multiply the spending increment, except by 1 or 0. Keynes' "multiplier" is "k". k = 1/(1-b) = ΔY/ΔI = 1/1 = 1 b = 1 -(1/k) = ΔC/ΔY = marginal propensity to consume ΔC/ΔY = 0/1 = 0 Investment has zero propensity to consume. Keynes did this: 1) ΔY = ΔC + ΔI 1 = 0 + 1 2) ΔY = 1/(1-0.9) x ΔI 1 = 1/(1-0.9) x 1 [Add $1 ΔI before multiplying. That's illegal.] 1 = 10 [Multiply] 0 = 9 Nine dollars of nonsense, which is why we have over $19 TRILLION government debt. And notice: ΔY = k x ΔI ΔY/ΔI = k ΔY = (ΔY/ΔI) x ΔI ΔY = ΔY To calculate the value of ΔY, you must first know the value of ΔY. And the only way you can get the value of ΔY is from equation 1. Keynes' multiplier concept is complete nonsense. P-E-MD-AS

+MrTugwit in this comment section i've seen you comment every other 3 months on average (since 9 months ago), and noone has replied to you. I don't know if you have heard about convergent series, cause that's what Sal (that's the name of the Khan Academy professor in this case) is applying here. An infinite sum has a finite value, you don't need to make the whole sum to get the value of the sum, cause you can use convergent series to demonstrate that the sum inifintely approaches the 2500 value in this case. So you can say a couple things about this: if you start with 1000, the total sum has to be greater than 1000; and the terms of the sum have to approach zero to avoid increasing the sum above a finite number. So yeah, this sounds crazy, but if you want to see something really interesting, search for this sum: 1 + 2 + 4 + 5 + 6 + 7 +.... + infinite = (-1/12) that, i couldn't explain to you at all.

+ThisIsRTSThree999 Keynes' original investment "multiplier" equations: 1) ΔY = ΔC + ΔI 2) ΔY = (1/(1-b)) ΔI mpc = b Keynes' investment "multiplier" infinite series: ΔY + bΔY + b^2ΔY + ... = (1/(1-b)) ΔI Unless you use P-E-MD-AS, that's an infinite series of illegal addition: ΔY before multiplication. (1/(1-b)) ΔI is illegal addition: ΔI before multiplication. To use P-E-MD-AS you must start at delta zero so you can multiply before adding. If you use P-E-MD-AS you get: ΔY = ΔI Khan Academy is adding before multiplying, and that's nonsense. You get the initial $1000 ΔI instantly. It would take FOREVER to get the next $1500. And $2500 is the MAXIMUM you could ever get. Is the "saved" fraction burned? And if you look at Khan Academy's Keynesian Cross video you will see that his "multiplier" line not only converges to the maximum number at infinity it extends beyond infinity, beyond forever.

MrTugwit no my friend, to explain this Keynes is not relevant. we only need Convergent Series. Also i subscribed to your channel :) loved those bear animated videos.

+ThisIsRTSThree999 The video is "MPC and the Multiplier". He's talking about Keynes' bogus "multiplier" concept guy. What happens to the "saved" fraction?

+ThisIsRTSThree999 You've told me that Keynes' "multiplier" is not relevant to a video about Keynes' "multiplier". That's nonsense. And Khan Academy only accounts for the mpc fraction. He doesn't account for the (1 - mpc) fraction. What happens to the (1 - mpc) fraction? What happens to savings?

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Zachary Samuel He does it for old people like me who are taking notes! 😍