Crowding out | AP Macroeconomics

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Crowding out | AP Macroeconomics | Khan Academy

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6 жыл бұрын

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How government borrowing could have negative effects on investment and economic growth by "crowding out" private borrowers/investors in the loanable funds market. AP(R) Macroeconomics on Khan Academy: Macroeconomics is all about how an entire nationÕs performance is determined and improved over time. Learn how factors like unemployment, inflation, interest rates, economic growth and recession are caused and how they affect individuals and society as a whole. We hit the traditional topics from an AP Macroeconomics course, including basic economic concepts, economic indicators, and the business cycle, national income and price determination, the financial sector, the long-run consequences of stabilization policies, and international trade and finance. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything www.youtube.co....
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AP Macroeconomics on Khan Academy: Welcome to Economics! In this lesson we'll define Economic and introduce some of the fundamental tools and perspectives economists use to understand the world around us!
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Пікірлер: 25

@rseesr7743 4 жыл бұрын

lmao having marco test 2 at 8 am in the morning and watching this at 2:10

@rseesr7743 4 жыл бұрын

macro*

@dubyabalthazar4598 3 жыл бұрын

Lmao

@crouton394 2 жыл бұрын

how'd you do?

@rseesr7743 2 жыл бұрын

@@crouton394 75% and letter grade A-

@parthshah2992 3 жыл бұрын

During deep recession, crowding out is less likely to happen as private sector investment is already minimal and therefore there is only insignificant private spending to crowd out.

@meetbhavsar1072 Ай бұрын

Ty😊😊

@dohael8519 6 жыл бұрын

Firstly i want Say thanks for your great informations ...but plz could you translate your speach to arabic or french coz i can't understand all your speach...plz i want benifit by your informations plz and thanks.

@treytadel3502 5 жыл бұрын

No Sal. This is wrong. The aggregate demand for loanable funds does not shift, bcz general consumers have received no incentive to demand more. It is the supply of funds that is soaked up from the huge gov't borrowing, causing the supply curve to shift upwards to the left. The shortage of loanable funds at each and every price (r) relative to existing demand causes r to increase.

@callumh4639 5 жыл бұрын

Glad someone picked up on this. I was so confused because all my study materials explained this as part of supply side economics

@artemisrafti3956 3 жыл бұрын

I believe this is incorrect. When the govt deficits spends, it is literally net crediting bank reserves and deposit accounts by the amount of the deficit. Aka, it is creating base money via keystrokes. Then why does the govt issue treasuries? To drain excess bank reserves that would otherwise cause the fed funds rate to collapse. The govt doesn’t borrow money at all, it is the issuer of the currency.

@colmrobert5748 3 жыл бұрын

Artemis Rafti so the video is correct? Both make sense, I’m just looking for a definite answer in regards to the actual economic theory.

@artemisrafti3956 3 жыл бұрын

@@colmrobert5748 The video is incorrect because it assumes a fixed pool of savings. When government spends, it adds to national income, which then increase savings since savings is a function of national income.

@farahahmed01 4 ай бұрын

@@artemisrafti3956 so if the governent borrows according to u supply of loanable funds should fall? does that mean Money supply falls too???

@johnlama5577 6 жыл бұрын

Great video!

@mikemcyap 7 ай бұрын

When the govt runs a budget deficit, there is less public saving. Total saving in the economy is the sum of private and public savings. With less public saving, the supply curve in the loanable funds market shifts left. With the given demand curve, this sends the interest rate up. Private investment is then said to be "crowded out." The equilibrium loanable funds quantity is then less.

@tylerandjsh1873 6 жыл бұрын

thought that said coming out for a sec oof

@henryrocks11 6 жыл бұрын

But what would happen if a government decided to eliminate all government purchases funded by borrowing because they're worried about a deficit?

@shankysays Жыл бұрын

then economic development will freeze. gdp will freeze and then start going down.

@RU1N3D. 10 ай бұрын

bit late mate@@shankysays

@lewirock6995 2 жыл бұрын

Is there a way to explain this microeconomically ?

@KrDavidLee 3 жыл бұрын

This video is wrong. Supply curve shifts to the left. An excerpt from Principles of Economics by N. Gregory Mankiw: "When the government runs a budget deficit, public saving is negative, and this reduces national saving. In other words, when the government borrows to finance its budget deficit, it reduces the supply of loanable funds available to finance investment by households and firms."

@davidjacobs1413 5 жыл бұрын

It’s a white curve not a blue curve, lol

@AprenderEconomia21 Жыл бұрын

This model is wrong, it doesn't understand that banks create money and that treasury pays in reserves. Chek Steve Keen for more insight on the endogenous money, as it has been recognized true by central banks themselves. Loanable funds is wrong.

@aidanzhao2830 Жыл бұрын

AP Econ is just doing the basics bro