Business Cycles- Macro Topic 2.7
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- čas přidán 13. 09. 2024
- In this video I show you the business cycle and talk about how economists predict recessions. It turns out that they aren’t even that good at it. Remember, if someone tells you that they know for sure that there is going to be a recession in a few years, they are probably selling you something.
Speaking of selling you something, you should check out my Ultimate Review Packet. It will totally help you rock your econ exams.
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In this video I also cover the four phases of the business cycle, consumer confidence, unemployment, and the Sahm rule. By the way, that study I mention that says that IMF economists only predicted 4 out of 469 recessions focuses on spotting recessions longer that a year in advance. The article is right here: www.bloomberg....
Please don’t take this the wrong way. Hard working economists are all over the world, trying to make our lives better off. It’s a tough job and I tip my hat to them.
Thanks for watching my videos.
The answers to the practice multiple-choice questions are below. Just click on "Read more".
1. C
2. A
3. C
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The man the myth the legeeend.
1. C. Pea, Recession, Through, Recovery
2. A. Cyclical Unemployment
3. C. Unemployment and stimulus spending
Thank u for the answers.Can you pls explain the 2nd one?
How did you understand?
@@dynamisarian6576 If the current output is less than the potential output, it means that if we were to draw it on a PPC, it would be inside the curve. This signifies unemployment. Since the potential output is anything along the line of the PPC, if we produced along that line, it would mean that all of our resources are fully employed, and we are being efficient. (Remember that full employment counts frictional and structural unemployment since they always exist, but it does NOT include cyclical unemployment.) Because of this, we know that if we are producing inside the PPC curve, there must be cyclical unemployment (which could be due to a recession).
You can also see this in the business cycle graph since if the current output is less than the potential output, it means that we are producing where there is a negative output gap, which means that resources aren't being fully employed, which can be due to a recession, or if you are recovering from a recession. So the answer must be cyclical unemployment since it happens during a recession!
Hope this makes sense :)
@Creed Assassin L
@@cristinakoga can you help to explain why each of the other answers for Q2 is wrong?
@@Xaxoc The last time I studied this was over a month ago so I apologize if any of this is wrong, but here: When current output is less than potential output, it means that we must be in a recession. (B) is wrong because if we’re producing at less than potential output, it means that the LRAS is located to the right of equilibrium, showing a recessionary and NOT inflationary gap. A change in inflationary expectations (C) can of course cause SRAS to shift, causing a recessionary gap but you don’t NEED to have a change in inflationary expectations to have a recessionary gap. The same applies to (D), an increase in wages would decrease SRAS causing a recessionary gap but there doesn’t need to be an increase in wages for the gap to occur. But we for sure know that there must be Cyclical unemployment (A) because it always exists during a recessionary gap. Remember that during a recession, all 3 types of unemployment exist: structural, frictional, and cyclical. (D) is unrelated to the topic and is just incorrect. Hope it helps!
“We’ll have to wait for the next recession”
-February 2020
Pretty dark considering whats lies just a few weeks ahead.
actually nope
I know, right... I saw that, my first thought was, 'oook, so this is how high quality Deep State propaganda productions are getting.', lmao. ... my next thought was, 'Obviously, Sahm figured something out, so they needed to crush her.'.
"Every recession back to 1970! Wow, that's great, good for you." ... heh heh heh, bet your little formula didn't predict this one, did it, slave?! AH Ha ha ha ha" lol
Peace
Lmao damn
Hey Mr. Clifford! I just wanted to say that you have helped me so much with Micro and Macro! Even though I currently don’t take any economics courses I still enjoy watching your videos because they’re fun to watch. Keep doing what you’re doing😊👍
I dont know why am i still walking your videos after uni, i guess i just likes your vid a lot. thanks for making them!
that’s weird
Dude why
You helped me so much in AP Econ. Cant believe I'm almost a year out of High school
DAMNNN, I'm almost a year out of high school and still using the man the myth the legend Mr Clifford's vids but now to study for the International Economics Olympiad jajajaajaja
1:24 Peak, Recession, Trough, Recovery repeat
2:23 Recessions/Depressions are Depressing
2:48 A Recession is 2 successive quarters of falling GDP
3:17 The Sahm Rule
- When National unemployment rises 25% or more relative to the low in the previous 12 months
3:46 Prevent Recession Pain
Give people money 💵
4:17 Groundhog
4:54
The Sahm rule is when the national unemployment rate rise 0.5% or more relative to the low in the previous 12 months.
Giving people money is not a good idea. Firstly, the stimulus package has to pass through congress. Secondly, it would probably increase the money supply, increasing the inflation rate. Thirdly, tax cuts are better. They are instant and don't increase the money supply
@@josiahwillemse3514 Stimulus is when the government collects money via taxation and then returns it to the population. A tax cut results in exactly the same thing, it just doesn't involve the government as a middle-man. Just pretend that the government never collected the tax in the first place and they're equivalent. So both would increase the "money supply" and could increase inflation. Perhaps you have confused stimulus with quantitive-easing?
The main difference is that stimulus can be targeted to the people/businesses who most need it whereas tax cuts are an incredibly blunt tool which gives more money to the wealthiest people/most successful businesses. Think of it like this: if some companies are going broke, then they are the ones who need financial support - otherwise, they will go bust, unemployment will rises and the economy will stall. Conversely, if you're a business who is paying a lot in taxes, then you're most likely not struggling and are less likely to go broke. A tax cut would help precisely the wrong businesses. The same is true for the general population.
Your videos are fantastic and also hilarious. Fun way to learn!. I am currently studying macroeconomics and I seriously watch your videos instead of reading my manual to understand better. Awesome job.
Thank u ! approved my exam! all the best man.! I understood a full semester in a week with your videos! :D
who’s watching while we’re in a recession 😘✌️
me
Me
still rocking the recession into 2021
Me
Me
1st View 1st like
Loves your ways of teaching sir
#India
liar lol
You were born on THE best day of the year... Anyways, your videos are amazing. Thank you for the work you do.
Happy birthday Mr. Clifford! You help so much with Econ!
4:08 Top 10 moments before disaster
the economists were kinda right about the 2020-2021 recession
Just not for the right reasons. Here it was damn PANDEMIC 😳
Hey Mr. Clifford! Happy Birthday!
I'm very concerned about that gallon of milk in the background 🤣
haha
What about the inversion of the yield curve as a predictor of a recession?
nice explanation, i didnt have enought time to keep up with my mba degree, but your video keep me educated
You make me want to teach♥️...you make it seem so easy
Happy early birthday, bro!
when there was a recession 23 days after this video was published
Did the Sahm rule work for the pandemic recession? I would guess not, since it was an unusual situation.
belated happy birthday!!!!!!
22
4:05 You will find out very soon
Happy Birthday Jacob!!!!!
The key to forecasting economic cycles is to look at underlying land markets, which going back nearly two hundred years follow cycles of boom and bust every 18-21 years on average. Why are land markets such a powerful influence? The answer is because land is an asset with an inelastic supply. Because of generally low effective rates of taxation on the annual rental values of locations, land is subject to hoarding and speculation. Thus, the price mechanism relief upon by economists does to apply to land. Rising prices attract speculators who acquire land to hold it in anticipation of still higher prices. Under certain conditions the supply curve for land can actually lean to the left. Add cheap credit to the situation and the upward pull on land prices is even stronger. Then, as the cycle reaches the 18 year point, the stresses of land prices imposed on consumers looking for purchase a residence or move into an apartment become too great to be absorbed. This same problem occurs with regard to commercial property markets.
So, the last crash occurred in 2008. Eighteen years will be here in 2026.
does sahm rule work this time?
Isn’t this unpredictability of complex systems a feature? If an economist makes a prediction that prediction affects the economy so, a complete prediction about the system cannot be made from inside the system.
Thanks!!! 💕
Under Sahm, if stimulus packages were delivered to households it would cause more inflation?
Yes but if they were not then people would have money to spend, decreased spending will decrease business profits leading to closure. More people will become jobless because of closed businesses and spending will decrease again and this will lead to a deflationary cycle.
This is why it is said that deflation is more dangerous than inflation. Hope it makes sense.
Where’s the key for pop quiz..
The Australian dollar just hit pre GFC lows 😬
You shouldn't try to prevent a recession. A recession is a necessary part of the business cycle which clears out the inefficiencies and corrects the misallocations of capital.
I think it's better to not have any recessions at all
Where is the correct ans that mr clifford gives in the comment?
haha the milk bottle in the background
i guess we'll just have to wait and find out guys
Can u help me to apply to master of economic?
Those economists are getting better though, those predictions at the beginning of the video obviously turned out to be true.
Sahm's time has arrived! I don't, however, think increased spending will cure it... We shall see.
I wish I new this in 2021...!!!😑😔😪😣😓
ACDC Econ
winter is coming
ewan wu 😭😭I was just thinking about this when he mentioned depression and suicide rates
I think we are in a new recession and the stimulus checks are happening. Interesting...
105
The recession this time, was from government policy in response to the pandemic
Is that milk in the background?
did sahm rule predict thislol
Q1. c)Peak, recession trough, recovery - (also in that order)
Q.2 a)cyclical unemployment
Q.3 c)unemployment and stimulus spending
Not gonna lie in Q.2 I took a little help from google. sorry.
The ending to this video ended up being really ironic
More unemployment , depression, divorce, suicide, etc
Wouldn't sending stimulus payments to households be like just tell everyone that a recession is going to happen? Wouldn't that trigger the recession earlier?
The south sea bubble popped when the shares give a 30% dividend and everyone immediately know something was wrong.
where da milk at
Seems like a awful system for society's to have a solid future. Unless you have plenty to lose of don't live paycheck to paycheck.
Welp, he didn't have to wait long...
1(c), 2(e), 3(c). m i right guys?
I think so!
@@shirlz7571 ok tenks for replying
@@anuragpandey8996 The answer to question 2 is A
_like all complex problems, the answer is socialism_
This isn't necessarily socialism . Socialism dictated the seizure of the means of production and abolish profit and privatization .
+Mikey Meatball Scandinavian Socialism (Social Democracy) is the answer
@@koukkoufos2000 I don't think so. Many of them are super complex and convoluted . They fail to solve the problems that were created for. They are full of taxes and cycles of poverty.
I would prefer a more open market of the American system.
+Mikey Meatball I agree, which is better than what the U.S has lol
+Source Code Deleted That’s bullshit 😂
Every study proves that they have a better standard of living than the U.S and they are the happiest countries on earth due to financial security since their government works for them and not rich people like the U.S
This didn't age well
Well this video didn't age well