The business cycle | Aggregate demand and aggregate supply | Macroeconomics | Khan Academy 

L.A. boy98 HAHAHAHhahahaha😭😭😭😭

tomorrow i have a macroeconomics exam and now i'm exactly doing what you have done 1 year ago. i hope i will get a result as high as yours. khan academy never gets old!!!

@@boraulu8900 tomorrow I have business economics exam me too done exactly the same thing which you two had done years ago... Wish me luck P.S: I'm not very good at studies even so wish me luck to atleast pass my exam 🤞

@@boraulu8900 how's life

@@musak.4068 i have done very well in the exam. Wish you all the best guys. Thank you very much! Khan Academy never gets old!!!

@@boraulu8900 Great! I took a break from trading after a big loss and have been studying khan academy for the past several months.

Human emotion really only lengthens or shortens the different periods of the "cycle." Emotion may influence the longevity of the period preceding the boom, during the boom, during the bust, and following the bust. It can fuel higher highs and lower lows in the prices of assets, but it is not the cause of the boom-bust cycle (aka the Business Cycle or Trade Cycle), and not the only factor influencing each period's length. Bubbles are an effect of the cause of business cycles, and are perhaps the most visible, observable effect. Unfortunately, I do not have any papers or textbooks on the influence of human emotions on the business cycles as from the vantage point of the Austrian School of Economics, emotion plays a minor role and again is an effect not a cause of the cycle. However, behavioral economics is attempting to apply psychology and sociology to economics in order to go beyond the stationary economy that Keynesian theory and mathematical formulas can only describe (at least cleanly), so you could look there. However, I advocate for the sound theory developed by the Austrian School (Mises and Hayek); though, you may be disappointed to find that the theory discounts human emotions as they are not the, or a, primary cause.

What about the rest of the world? They have economies too

Fed rates have made recessions more common, they aren't the driving force behind the business cycle though.

Carlos. 62% of global assets are US dollar mate

+Phillip Hlavac A bit late but it is Smoothdraw

capital is the source of capital.

@@CRoy-qu7ib I disagree. Labor, applied to natural resources, is the source of capital (if, by capital, one is referring to tangible goods). The dynamics are confused by using the term "capital" to refer to nontangible financial assets, which are claims on capital goods and on other tangible assets, such as land and natural resources. Nonfinancial assets are also exchanged for other nonfinancial assets.

The Keynesians don't just care about GDP, and there is a rich literature out there about how GDP fails to account for everything.

Well, you are entitled to your opinion, as is Khan Academy and its representatives. For the most part, these series of videos are designed to be watched in succession -- the instructor has repeatedly said before, after, and in this video, that he is an avid supporter of human emotion as a defining factor. And this is all theory, opinion, he always says, "I think.." or "I believe..." or something along those lines. A lot of the people watching this video, students, know that economics is wholeheartedly made up of complex theories based off of simplified observations. Most people here are just to gain information to pass classes, and will quickly forget the majority of information they learned after the fact. On a side note, I'll have to side with this video's opinion that emotion is a factor and very much does account for the business cycle, as someone who had studied sociology, psychology, and the alike, though I do not have enough information to say whether or not it is the primary, main, or strongest one. Of course, traditional ideas and theories conveyed though conventional methods such as textbooks, unless modernized, will never be able to accurately portray a changing society, as it tends to forget that economy is not alone, there is a domino effect that includes politics and society, in regard to economics. (The former two which are highly fueled by strong human emotion, almost irrefutable, I'd say.) Humans can act sporadically, and no economic statistic or theory can account for human behavior, (if so, a minute percentage) but human behavior and emotion can definitely play into economics, because emotions for the most part fuel behavior, and behavior one of the core essences of any society, in regards to politics, societal aspects, and the economy.

Michael is correct. The fundamentals of economics rely on the statement that individuals make rational decisions with their money. Although, the study of economics does always have the saying, "On the other hand."

He's repeated on several occasions that this is an OVERSIMPLIFIED version of the business cycle. Start your own channel if you can explain the business cycle better in 8 minutes. :)

F.A. Hayek has addressed the Paradox of Saving or Thrift in his 1929 article titled, "The 'Paradox' of Savings" (mises.org/library/paradox-saving). Investor psychology, or human emotion, plays a role in the lengthening or contracting of the different periods of the boom-bust cycle. Time preferences of individuals may influence the general increase in prices, but the main cause of the boom-bust cycle, today, in the USA, is the manipulation of the money supply by the Federal Reserve Banking System. The rest of the observed effects are consequences of this manipulation. Empirical analysis has a hard time determining this from the data due to the tremendous amount of variables changing at all times and interfering with each other. Praxeology is a better methodology for determining the causes and their effects.

I do agree, however, that emotion is not a key driver of the boom-bust cycle. It is not a key driver, but an effect of the cause. This is a Keynesian take on the business cycle, but good luck using it to forecast the next business cycle.

Ema Henecia During recessions, the general goal is to increase aggregate demand. So, usually you see a cut in taxes, which leaves consumers with more disposable income (useable money), or an increase in governmental spending (this pushes more money through the economy as well, driving aggregate demand upward). The central bank can take several measures as well that don't require political action.

+Ema Henecia One can argue that recessions are the solution to a previous problem. Clusters of malinvestments that need to be liquidated in order to make effective use of the means of production possible again. The preferred solution is to put more money into people hands in order to shorten the period of time in which this "solution" can unfold. Thus we see phenomena that the public calls "too big to fail" or "excessive risk taking". Its the perfect but unwanted result from the preferred solution.

Ema Henecia all breathing needs a breathing out aspect.

Simply, don't manipulate the money supply, especially in the form of fiduciary media

How is that a contradiction?

+Laereom using capital you purchase technology (or real estate) which in turn is an increase no?

Because that's short term productivity increase.

Khan academy is a project; not the guide. How is Mises more consistent with Keynesians which actually use models and facts?