MPC and multiplier | Macroeconomics | Khan Academy

Introduction to the marginal propensity to consume and the multiplier

Macroeconomics on Khan Academy: Topics covered in a traditional college level introductory macroeconomics course

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[brendanwhipple]

"Lemme 'try' and draw"....I feel like such an inept artist if he can just whip that up.

[jawadaslam]

For people thinking that same money is being exchanged so nothing is multiplied. This may help you understand.
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

[taintedruins]

Having studied this in a traditional lecture course, seeing 1/MPS explained mathematically blew my mind and really solidified my understanding of the process.

[M_Chu]

Firstly, WOW. I'm siting here eating my breakfast, but i have a Macro Econ Final coming up in an hr, so I wanted to do some quick last-minute review. I'm glad I randomly searched this up instead of just watching some random Youtube vid while i eat. HAHAHA. It was very helpful. All your vids are very Helpful! Just wanted to leave a comment to Thank You, Sir. Or thanks "Khan Academy." o_o

[zgjlzwq]

I wish my Econ teacher actually shared this in class. It’s fascinating to see something I’m learning in calc being used in Econ. Thank u for encouraging learning!

[jing]

This video is extremely helpful. I didn’t know why spending multiplier is 1/(MPS+MPI). It gave me answer I wanted.

[thl]

Always curious. Is he writing and drawing by using his mouse or some kind of drawing machine?

[shareef]

THANK YOU!!!! Thank you so much!!! I read my econ textbook and vaguely understand it then i get on here and get it very very well, thank you so much Sal (sorry if that is not how you spell it). I know you will probably see this and ignore it but seriously THANK YOU!!!

[tracywilliams]

Khan explains breakdown with money and the exchange for the total process helps

[AFKavya]

I really thank Khan academy which works really hard in order to clear the concepts among the students...

[Bejonboxbreaks]

Thanks for the videos. You're helping me study for my macro exam.

[miriamperez]

This video is amazing. Easy to understand. Thank you!

[richachandra]

You r a legend.. The way u teach is commendable🙏!i will be always a dependent variable for ur lectures😅

[timblebear]

Khan can even draw well. What CAN'T he do?!

[thatnewguy]

Ok so spending more in a growing economy keeps things going and improves things further. What happens when you spend less in a failing economy, when MPC is low?

[adampecsek]

I wish more econ texts explained the derivation of formulas like this, rather than "here's the fisc. multipler...memorize it." This sort of explanation would take two sentences and one two lines of math, and makes it far easier to learn what's going on.

[CRRidR]

How does 1, 000$ just magically become 2, 500$ tho??? farmer gives the builder 1, 000$ builder now gives farmer 600$ leaving him 400$ leftover

Aren’t they just sharing a thousand dollars back and forth???

[davidstanulescu]

Thank you literally saving my econ mark

[inkspots]

We can use some calculus ways, like summations then based on the test of geometric series, we can add it up to the result !

[alkerbix]

Love the videos, they are clear and concise and good recaps that go over the basics