*Main outtakes of this lesson* 1) _Recessionary gap_ - a situation wherein the real GDP is lower than potential GDP at the full employment level. 2) _Inflationary gap_ - the amount by which the actual gross domestic product (GDP) exceeds potential full-employment GDP. 3) _Macroeconomics_ - the study of the entire economy as a whole rather than individual markets. 4) _Fiscal policy_ - the way a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. a. _Expansionary Fiscal Policy_ - stimulates the economy during or anticipation of a business-cycle contraction. b. _Contractionary Fiscal Policy_ - enacted by a government to reduce the money supply and ultimately the spending in a country. c. Classical theories assumed that the economy will fix itself in a long run, and that government intervention will, at best, lead to unintended consequences and, at worst, cause massive inflation and debt. 5) _Deficit spending_ - the government spends more money than it collects in tax revenue. a. _Crowding out_ - where increased public sector spending replaces, or drives down, private sector spending. b. Keynesian economists maintain that _crowding out_ is only a problem if economy operates at full capacity, where all workers are employed and we're producing as much as we can. 6) _Austerity_ - raising taxes and cutting government spending to reduce debt. In crisis of 2008 was main policy of EU, which led to worse results than deficit spending policy in US. 7) _Multiplier effect_ - the initial increase in government spending of 100$ might turn out to be 175$ worth of actual spending in the economy. a. When the economy is booming, multiplier is close to 1x. b. When economy is in recession, the multiplier is around 2x. c. Spending on infrastructure, and aid to state & local governments , also seems to have fairly high multiplier, about 1.5. But general cuts to payroll and income taxes seems to have a multiplier of about 1:. If the government cuts 100$ in taxes, the economy is going to grow by about 100$.

At the beginning I was looking for the skip ad button...

Sitting in quarantine trying to learn more about the economy... interesting how this video aged

Hey Crash Course, can we get a "why are we learning this" series? I'm a middle school science teacher and my kids always ask this question. Many times I am able to relate material to life but sometimes it's a struggle and I know it is for other teachers in science and other subjects as well. It would be fantastic to introduce a subject with a short video explaining different layers of importance of certain subjects as well as specific topics within them.

I'm surprised you didn't make more use of that really expensive looking under ground lair set.

I've learned more watching 11:53 minutes of this than the whole semester at my University.

Let the economics melee begin!

GIVE US CRASH COURSE PHYSICS, DAMMIT! ..nice video, by the way.

I would love to see sources on Crash Course videos. Just a "we used these papers for sourcing" type deal. Allow some of us to dig deeper if we want.

As you said, Keynes also said that in inflation times - when the economy is running well - the government should increase taxes and decrease government spending. The problem is that many countries do not do that, so their debt rises and rises. That's one of the main problem many countries nowadays have in my opinion.

"Maybe it's about that thing you didn't have in sixth grade: *confidence* ." Gurl, please. It's been years since then, and I STILL don't have that!

i am watching your videos for over an hour now, which is literally saving me from failing my macroeconomics test tomorrow morning. you explain that stuff way better than some profs in university as your videos are perfect to understand mathemetically complicated theories! Greets from germany and lots of thanks for all the work :-)

@CrashCourse, I would really appreciate if you guys had a recap/ summary of the main points we've learned at the end of all your videos like how Hank Green does on his SciShow videos. Thanks for putting this together!

Thank you! Spent over 30 hours reading through material for my pre-course and this channel explained it in a much easier way in under two hours.

"Maybe it's all about that thing you didn't have when you are in 6th grade: confidence." I still don't have it by now.

I normally would've found the idea of an Economics crash course being co-hosted a little ridiculous, but these two are just so dorky and engaging and adorable. Love the work!

This helped me grasp this concept SO much easier. I was lost and thought I'd fail my essay. I am extremely grateful for this video and the rest of the economics series. Keep up the great work.

Now I can make informed decisions while making my opinions on government policy AND better manage my economy while playing Galactic Civilizations 2 and the like.

The fallacy that government spending creates jobs is hardly older than the rebuttal to it. While it is true that even a broken window helps the glazier to get some cash, the person who pays the glazier would otherwise have spent that money elsewhere. This means that no new capital has been created. Only the direction of spending has been altered. The same principle applies on a national scale; as the money used to build a road or a bridge isn't conjured out of thin air, but is simply a redirection of where that money would have been spent. So not only have you not created jobs, but you may well have destroyed some. All this before we get to the problem of national debt and inflation.

Love u Adriene , your teaching ! Thank you all for making such videos which are very helpful in understanding economics .

Very relevant right now!

Loving this series so far, you guys are doing a great job, I was skeptical at first but keep it up guys!

I get more out of these CrashCourse presentations that just about any other resource I'm provided with. I've written entire papers with the material from a 10-minute video. NICE JOB!!

The comparison to the US and EU policy did not take into account the massively different interest rates those countries where paying for debt that the effect that expansionary spending would have on the interest rates of new debt. Greece is the most extreme, with the interest of 10 year loans getting to over 40%. Meaning if had an expansionary spending where government debt spending was 10% of it's GDP, after 3 years interest on ONLY the new loans would be 12% of GDP. No one believes that Greece would ever get the growth that would allow them to pay that debt, so the debt rate only goes higher. US debt interest on the other hand was only ~2%, so the cost of expansionary spending was very low for the US. You can't cover everything, but that was a big key when comparing US and EU spending. Also, the main reason the US did not see much growth in spite of spend $800B, is that when government debt went from 70% of GDP to 100% of GDP, private sector debt when to ~260% of GDP to 200% GDP, causing a net loss of 30% of total debt over as a percent of GDP over ~6 years.

Everyone is economist on twitter.

10:49 dam bruh she rlly got us there

Unemployment is at 5.1%, but the labor participation rate is at an all time low. The way Unemployment is calculated doesn't really tell the whole story. In deficit spending, you're borrowing money to (possibly) enhance the economy now. But at what cost, really? It's intergenerational debt. The debt we have now will never be repaid in any of our lifetimes. That seems like extreme taxation without representation. Literally a tax on the unborn. Hardcore.

It's easy to say that economic policy by the fed helps regulate the business cycle, but historically, it hasn't had a measurably positive effect on the economy. Since the creation of the fed we've had larger depressions, not less. It's easy to say "Oh, it could have been worse," but that can only go so far when it's always the answer to failures.

I love how extra the intro is

Who else is watching in 2020

This is so helpful during crisis to understanding what's happening out there.

This is such an awesome series. Keep up the great work, guys!

I love Evil Stan Voice. GIFF ME MOAR!!!

One major problem with the US unemployment rate: Most of the drop of unemployment has resulted not from people finding jobs but from people dropping out of the labor force whatsoever and quitting their search for a job.

Awesome underground lair set!

Thanks for this Wonderful Course Team!

“Lower costs leads to more production then makes more jobs and the economy is back.”

Yes crash course :D

This was great, awesome job!

@ Adriene I love your sense of humor and the way you look at Jacob when he talks makes me laugh 😂

Yeah, can't say I wholy agree... The big problem is that this tool is cursed to fail by design, since it's usage will be always tending towards improving political agendas then fixing the economy.

Hayek FTW! Make a video about Hayek theories!

what a great presentation, it all makes sense now. thanks

Great intro and ending!

The thing with tax cuts is that they're not created equal either. Cutting taxes on those who don't have much would have a greater multiplier than those who do. But you acted like everyone is taxed the same.

Crash Course Sociology? Crash Course Tale of Two Cities?

Awesome video !! You guys are awesome teachers :) Thanks

Mind blowing content with case study.

Uploading this when the GOP debate is on... you win this round Green Brothers.

Is she crying at 10:56? Great video anyway, loving the series.

thank you for the wonderful lesson :)

love yall, great energy!!

Who else is here for the ib Econ test?

Keynes: Y'all mind if I BREAK SOME WINDOWS???

Great review. Really helped me before my exam thanks :)

This is something I learned when I played Civ V - build infrastructure before you do anything else. Your army might be awesome, but it'll be a pain to move and supply if you don't have roads. Oh, and don't fuck with Gandhi.

I feel like this debuted about a month too soon. ....was intended for Halloween and got a little too stimulus and jumped the gun.

This comments section: people who can't handle that economics is largely Keynesian.

Great video and great series! By the way, I really like those laughs!!! They were really funny

I am pleasantly surprised by the fact that you are actually getting the hang of it. Nice vid.

"In the long run, we're all dead" LOL

raising taxes is not part of austrian economics. So you cannot compare Europe to US. (at least not to say which school of economics works better) And you cannot judge how the program has worked until you stop the stimulus. So far fed raised rates by 1/4 point and the market is already freaking out and heading towards another recession. We will see if the keysian ideology has worked when we are back at normal interest rates. Before than its like saying that operation was successful before the patient woke up and is off the life support.

THIS HELPED ME FOR MY GLOBAL ECONOMICS! Keep up doing the good deeds :) Liked & subscribed

Other than the writings of Hazlitt, Bastiat, Mises, Rothbard, and Hayek available in free pdfs on Mises.org, a good place to start when thinking about the economic history of these neo-mercantilist experiments is with the financial analysts who spelled out how the 2008 recession would occur. Peter Schiff, David Stockman, Jim Rogers are a good place to start.

Here's an idea - low taxes, low govt. spending.

To prove that deficit spending is preferred than austerity, you gave the example of the U.S. vs. the Eurozone after the 2008 crisis, where the U.S. did spending and its economy grew, while the Eurozone had austerity and its economy contracted.I don't think you can compare them both. It's oranges and apples. U.S. has a strong economic structure, and only experienced a server debt crisis, but overcame it... on the other hand, Eurozone has very shaky political and economical structure, and the fiscal policy between Eurozone countries varies... so I don't think you can compare them. And besides, the U.K. and Germany both did austerity after the 2008 crisis, and yet their economies grew, and their unemployment was less than in the U.S.... As economists, please be more carful when you draw conclusions between two economies, and especially when it's about a hot political issue....Anyway, I still very much enjoy your videos, keep'em up!!Thank you

I love this series!!!

Marshall & Lily teaching you life lessons!

Keynesian economics is the mechanism that fuels Crony Capitalism.

Jacob, you speak too fast. STAHP! D:

Every time I love Crash Course Economics a little more. I wish my teachers were like them hahaha

hilarious opening and ending

at 7:05 I was like "I thought u.s. debt went over $10t already, what happens to the clock?"so I googled and, guess what, another digit is added to it. that is so sarcastically convenient as how congress raises the debt ceiling

it's a bit fast...hard for beginners to catch.

Great episode!

You guys are doing a great job 😁

Did she just compare laissez-faire economics to bloodletting and Keynesian economics to modern medicine? Wow.

yeah.... taxes were only raised on the poor and working classes here in the UK, since they don't vote much, the Tory's cut the taxes of the super rich and corporations

Great videos as usual.

I had to watch this for school but I left a like for the Empire strikes back/Phantom menace joke. Nice one!

Don't ever put Empire Strikes back and... that _other_ movie in the same sentence ever again.

Keynes model worked great for Argentina... oh, wait...

so mindblowing!

Added to favorites lol well done

HAYEEEEEK

When the government tries to decide for the transactions of millions of citizens with different opinions, who know what is best for themselves, something get wrong.

Love this!

thank you for making this video

Yes, you can speak for the Eurozone, being "less successful". But that's the Eurozone, with it's massive problems such as, ooh, I don't know GREECE, and SPAIN, and ITALY, and their massive debts. The UNITED KINGDOM's GDP, however, is also growing, by 2.6 in 2014 and our unemployment in 2015 is 5.4%, a fantastic measure. And that's under 5 years of limited austerity under the coalition government. That's with 1 hand tied behind our back. This government is going to bring in more economic policy which will decrease unemployment even further, and reduce taxes, whilst reducing spending, and the economy's going to get even better in this country, whilst reducing the national debt.

Something tells me the intro was over budget

THANK you SO MUCH!

That beginning and ending though.

Just one error to point out (behavioural economics): a musician wouldn't save 50%

>EU >Austerity Yeah, Okay. The only EU country that had any semblance of austerity was Estonia, and the multiplier effect is just a Broken Window fallacy. To add to that Hoover was not laissez faire in any sense.

During the 'great moderation' in the 1980's Thatcher and Reagan hated fiscal policy!

Graph at 2:00 can be described as riding a bike. We started to study economics, we learned how to reduce our periods of decreased GDP, but that didn't mean we had learned how to ride our bike over a pot hole and not crash.

Jacob needs to talk more slowly

Honestly, you guys speak way too fast, you have to realize that people come to your channel to learn and retain information.

Recessionary Gap , Inflationary Gap , Macroeconomics , Fiscal Policy , Expansionary Fiscal Policy , Contractionary Fiscal Policy , Deficit Spend , Crowding Out , Austerity , Multiplier Effect .

Well understanding lecture