Aggregate Demand Video Tutorial

This video is the first in a set of four explaining the Hicks-Hansel model of Keynes' theory of Aggregate Demand, specifically the IS-LM interpretation. This model is very important to short run macroeconomics and attempts to explain shifts in the aggregate demand curve.

These topics are usually taught in an intermediate Macroeconomics class, and these videos are intended as a visual aid to further your understanding of the models.

This video reviews the components of aggregate demand, income, the consumption function and taxes, finding equilibrium in this short run model, and the factors affecting the slope and position of the aggregate demand curve.

These videos are based on the following textbook:

Dornbusch, Fischer, Startz, Atkins and Sparks. (2005). Macroeconomics, 7th Canadian Edition. McGraw-Hill

[hardekailawadi]

thank you, from India! great video series and website.

[MxD]

That's what I love about it, it does not take very long and it's a pretty accurate and complete explanation !

[johara]

Thanks...I'm studying for an Intermediate Macro Final at SFSU. This is an excellent explanation of this topic.

[chord]

Very nice video, wiped out all the confusion i had earlier.

[deeimperfectgirl]

This is a really good video. Help me so much in understanding.Thankyou

[jjndnp]

Thank you.. tho is a little fast I still understood the important parts and well as I said I wish it was slower cuz I'm peruvian, but you're right I can rewind as many times I want :) it was very helpful

[YH-ykgw]

Explanation is so clear and helpful!!!! Thanks!

[PFern-nzuq]

Great video! Thank you. Please make some more!

[Cristofero]

Thank you soo much! This helped soo much!!

[confusedtennisplayer]

When I am looking for the percentage change in aggregate demand between two quarters or two different years, would that be the same as the percentage change in GDP or would I have to do something differently?

[micoschwartz]

@longhorn4500 I know it's a lot of information. If you visit the website everything is laid out in writing with diagrams. Alternatively you can pause and rewind as many times as you like!

[Cristofero]

@micoschwartz what website are u talking about?

[Katsiakaniaris]

thank you very much! totally helpfull !! keep on doing this;) please:P

[USMAN]

nice do something on unemployment and living standards

[MrTugwit]

MacroTutor, you're talking nonsense.

I'll use Co instead of your C with a bar over it
for autonomous consumption.

You show this equation:

C = Co + cYd

At 1:56, you say that "c"
is the marginal propensity to consume.
That's nonsense.

The MARGINAL propensity to consume is: ΔC/ΔYd

c = ΔC/ΔYd

If you put that into your equation
you get nonsense:

C = Co + c Yd
C = Co + (ΔC/ΔYd) Yd
C - Co = (ΔC/ΔYd) Yd
(C - Co)/Yd = ΔC/ΔYd

Yd is clearly not ΔYd.

Your "c" isn't even the AVERAGE propensity to consume
which is: C/Yd

Your "c" is
the AVERAGE propensity for NON-AUTONOMOUS consumption:

C = Co + cYd
C - Co = cYd
(C - Co)/Yd = c

Also, at 1:55 you say:

"Disposable income is multiplied by the coefficient c
the marginal propensity to consume.
This tells us how much consumption increases
for every one dollar increase in income."

C = Co + cYd

You cannot increase the value of disposable income in that equation
because that would be ILLEGAL addition to Yd
before multiplication of Yd by c.

P-E-MD-AS says you can't do that.

Multiplication comes before addition, not after.
That's grade school stuff, guy.

[longhorn]

It's too fast. Everyone can read, but we need some time to grasp new idea - you're giving us no time. And because of the speed I couldn't understand some words and that's baaaad.