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Macro 3.3- Long Run Aggregate Supply, Recession, and Inflation (LRAS)

3463 ratings | 577105 views
In this video I explain the most important graph in your macroeconomics class. The aggregate demand and supply model. Make sure that you understand the idea of the long run aggregate supply and how to draw a recessionary gap and inflationary gap. Keep in mind that the "long run" is not a specific amount of time. The long run refers to enough time for resource prices (like wages) to adjust when there is a change in price level.Thanks for watching. Please subscribe. If you need more help, check out my Ultimate Review Packet http://www.acdcecon.com/#!review-packet/czji Macroeconomics Videos https://www.youtube.com/watch?v=XnFv3d8qllI Microeconomics Videos https://www.youtube.com/watch?v=swnoF533C_c Watch Econmovies https://www.youtube.com/playlist?list=PL1oDmcs0xTD9Aig5cP8_R1gzq-mQHgcAH Follow me on Twitter https://twitter.com/acdcleadership
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Text Comments (182)
Tabea Matthies (9 days ago)
As a non-native always have to change the speed at which the video is played to 0.75 cause you´re speaking so incredibly fast. But I like the way you explain things. Thanks for all these helpful videos!!
Krishanth Ratnam (24 days ago)
♥️👍🏻
Chamashi (1 month ago)
YOU need a nobel price for this video...
행인 (1 month ago)
I love you...
Rupsi Parajuli (1 month ago)
You are bae
tosha a (2 months ago)
You're so fuckin cool thank u sooooo much, enlightening
JoeBlackJackal (2 months ago)
bruh!!! Glad you make videos like this. Everything click when you said " the trick is to remember when there is recession wages will eventually fall and when there is inflation wages will eventually go up!!! my final is next week and this chapter was putting me on my knees LOL
Bryan Tay (2 months ago)
ure awesome
Ryan Bader (3 months ago)
I know I'm a bit late to the party here, but thank you so much for making these videos man. You've saved the asses of numerous university/college students. It's crazy to think that there are professors making ridiculous amounts of money when they can barely teach anything right -- especially compared to you. Cheers.
James Bancroft (3 months ago)
SRAS is horizontal, MRAS is upward-sloping, LRAS is vertical
Copy Tango (3 months ago)
Sir i didn't understand one thing .. How these gaps automatically corrected by market forces ? Can you please explain me !
Kevin Neu (4 months ago)
You should add Short-run aggregate supply to the title of the video
Gabe Mounkhall (4 months ago)
This video sucks go get a life dumbass
ZBEIROFFICIAL (4 months ago)
Best econ teacher everrr (THE GOAT🐐🐐) It's all clear
Mr cs93 (5 months ago)
By wages you mean price? In recessionary gap price falls and in inflation they go up.
Areej Atta (6 months ago)
Thanks man 😊
will straub (7 months ago)
I love you. You're such a great teacher and great person too !
Yahaira Vega (7 months ago)
Not as good as his other videos. The explanation was rushed. I hope he doesn't get sloppy.
bruno ochoa (7 months ago)
u said there were 4 possible things to happen, then you only explicitly named 2, demand and supply shock.
Lukiose (7 months ago)
Lifesaver
Ortega L (8 months ago)
I have a quiz in 15 minutes. Lol Thank you
Ava Oliver (8 months ago)
You know Jacob I must say I am an avid watcher and big fan of your videos the day before my economic exams, but this was a disappointment. I watched this video AT LEAST 4 times, and I still messed up on the recessionary and inflationary gap. Sure it may have been my mistake, but the difference NEEDS to be made clear. Anyways, thank you for the hard work Much love <3, Ava
Sebastian Haze (8 months ago)
Nice job man, you literally explained the concept in less than 10 minutes that took my instructor 3 weeks
Rowbare7 (8 months ago)
Econ Legend!
Mike Nuts (8 months ago)
Great vid, thanks
Manav Khasria (8 months ago)
does recessionary only occur with demand falling or can it occur with supply shifting to left too
Eddie liang (9 months ago)
When price level increases, workers can demand higher wages, but there is no guarantee that they can get it, meaning that if they don’t, AS stays where it is, instead of moving towards AS1. The result is that a temporary increase in output level becomes permanent, meaning that LRAS moves to the right and we suddenly realize that we can do so much more than we think we could. Also, if increase in AD is due to increased investment which leads to innovation that yields higher level of output, then we would also see right shift of LRAS rather than the left shift of AS. The model seems to suggest that either working habit is a constant or technology is a constant, or both... but they are, in the real world, constantly evolving...
Brittany Gazia (9 months ago)
Dude... These videos are old but they are better than my 2000.00 macro university class. Thanls for being amazing.
Mellz Nin Da Sage (10 months ago)
Thank you sir!! wish i can posses such energy lol
J Sv (11 months ago)
i wonder how much money he is making with youtube, he could defo be a big economics professor
Alperen Demirkilit (11 months ago)
No matter what some people say in some of your premium videos, those free educational vids help me so much. Thanks a lot.
nanah p (11 months ago)
Great information but can you slow down for the people who are not as fast as you
newsandreactions (1 year ago)
I love this but please talk slower....
Chandan Subba (1 year ago)
Appreciate the video. But he is speaking so fast as if he has to go to the toilet right after the video
Walter Wear (1 year ago)
You talk so fast!
Walter Wear (1 year ago)
You talk so fast!
Joe Vanderveer (1 year ago)
can you come teach my spanish class?
Davit Janashia (1 year ago)
It makes sense until next time :))
Doğancan Karaman (1 year ago)
Thank you man for all your support because I almost decided to kidnap my instructor's 8 year old son to pass the course but your videos helped me a lot. Now I decided to enter to the exam tomorrow.
Ashley Y (1 year ago)
I've never learned so much in 3 minutes and 40 seconds
Chantal V (1 year ago)
THANK YOU I have gained so much knowledge 😍
Josh (1 year ago)
Much love
fx (1 year ago)
legend
Amazing Grace l'Or (1 year ago)
Good videos, but talk too fast.
ohwymi (1 year ago)
thanks a lot!
Leticia G. (1 year ago)
Although I'm almost done with my economics classes I still subscribed because you helped me get through it all. Thank you!
Kate Corrigan (1 year ago)
Your explanation is so easy to understand. Thank you so much!!
shahin parween (1 year ago)
Excellent
Mark Holliday (1 year ago)
I have a question that I need to know! Can potential GDP ever increase or decrease?
Veronica Voinovich (1 year ago)
God these videos are helpful! Thank you!!
Igor (1 year ago)
2:28 Wasn't the FDR's administration doing everything to prevent this self-correction? They tried to prevent wages from going down by introducing a federal minimum wage, created cartels by working with big businesses and engaging in price fixing at higher levers, limited agricultural supply by paying farmers not to produce, etc.
Qilian Mincioni (1 year ago)
His explanation is awesome and really clear. It really helped me understand all these terminologies better
Mark Rabinowitz (1 year ago)
why is quantity = to gdp, shouldn't quantity x price level = gdp
I love you!!!!!
Maria Mitova (1 year ago)
is not GDP a value and not a output quantity?
Trayan Hristov (1 year ago)
Is there a way where AD increases just as quickly as AS thus shifting LRAS to right?
Boweir Joe (1 year ago)
another question,when we talk about “curve” it's not a “curve” why?
Boweir Joe (1 year ago)
just got a question,what is the difference between Aggregate supply to with Supply and Aggregate demand with Demand?
Lin Zhang (1 year ago)
this is my favorite economic channel, which is second to none. Hope it can last forever.
FUTURE S.E (1 year ago)
Nice Videos.
Lexie02 Jones (1 year ago)
Mark Cuban is that you? nah i'm just kidding! :) but you do look like him tho and thanks on explaining this really well.
Remi J (1 year ago)
At 3:40, why does supply increase when wages do?
Haven DeZeeuw (1 year ago)
You make so much more sense that any overpriced textbook. You are a fantastic teacher!
sarah jolly (1 year ago)
These videos are amazing. Thank you for making these concepts so clear!
Raiyan Hossain (1 year ago)
u r so fast and i hate that
simonesquared (1 year ago)
In 3 minutes you summed up what my teacher tried to teach in 3 weeks.
TanavSharma (3 months ago)
facts
Curious Squared (1 year ago)
3:37 "Hopefully that makes sense"-It does now, thank you!
Robert Johnson (2 years ago)
You say there are only four possibilities. Wrong. You leave out the possibility of the president enacting price controls as Nixon did in the 70s. What happens is that demand stays the same but supply decreases and the market does NOT adjust toward the equilibrium point. Demand exceeds supply, and you get lines at the gas station, the supermarket, etc. Here's a rule of thumb: if you've got lines then prices controls are the problem. Let the prices rise and the line disappears as supply increases and demand decreases.
Haven DeZeeuw (1 year ago)
This video assumes no government intervention. The thing with economic formulas is that they are not identical representations of reality, so on paper, you have to remove variables so that you can see what variables, when shifted, make changes. But you are correct that if you artificially lock prices, then the whole formula fall apart. Also, I agree that the government should stay our of our business, figuratively and literally. The government is why my college tuition is so dang artificially high.
Red Lamborghini (2 years ago)
I love youuuuuuuu
Ella A (2 years ago)
I didn't understand this subject before i watch this video I still don't understand
Steve Petrosyan (2 years ago)
Thank you for you videos, very helpful.
Filipa Carvalho (2 years ago)
Great job Mr. Clifford! A big thank you from a portuguese BSc in Economics student!
Joshua McCarthy (2 years ago)
I am forever in this man's debt. He has done too much for me.
mobiusbloom (2 years ago)
hehe this dude talks all quick and then dips..
T.O.R Øystein (2 years ago)
You are really good at this, the way you explain and demonstrate. I wished I had you as my teacher.
Cypress (2 years ago)
THANK YOU
finn (2 years ago)
I appreciate your videos but the fact that you call yourself "Mr. Clifford" is annoying. You're a YouTuber not a fifth-grade teacher. The idea behind referring to yourself as "Mr." or "Mrs." is to denote a certain superiority that demands respect which can be helpful for commanding a classroom. However, it comes off as pretentious in YouTube videos... Please consider
Maggie Ketchum (1 year ago)
Phineas Reams how about you act more grateful for free homework help.
ddelfao (2 years ago)
he is an actual teacher..
finn (2 years ago)
I do, it's annoying
David Shim (2 years ago)
the fuck? who the fuck cares?
Chris S (2 years ago)
Why did I bother paying for college? My instructors have zero charisma and teach at a snails pace.
Ollie (2 years ago)
My economics professor teaches in a 1 hour lecture and I don't understand anything, then I come here and I understand it within 2 mins!!
TheGerogero (2 years ago)
Okay I just figured out that the AS and LRAS are separate curves... I was under the impression that the AS _becomes_ the LRAS. Small conceptual shifts.
SCA SIREN (2 years ago)
Oh youre an ACDC fan huh? Name 3 of their albums.
zambokid89 (2 years ago)
all good but you could have gone a bit slower.......... ffs!! :D
Watthakan Thani (2 years ago)
I have macro and micro exam next week, just listening to you made me feel so confidence. thank you.
raffi3o3 (2 years ago)
thank you Mr Cliffard
Do Moore (2 years ago)
He is the best teacher I have found on YouTube! You take time to explain and not rush through like many instructors. U R the BEST
Phone Myint (2 years ago)
Thank you so much sir.
Daix peterson (2 years ago)
I just had my econ final, didn't understand what was going on the whole semester, binge watched your videos and here I am with an A- for the year. Thank you!
Aldrich Wang (1 year ago)
congrats!
Papa Seed (2 years ago)
Player72 ye boyy
Player72 (2 years ago)
same bruh lets kill this ap exam in may
Smashinbedrock (2 years ago)
this makes the boom-bust cycle make more sence
Nethmi Randeniya (2 years ago)
wow.... just wow....😄.... I was like😶😑😐😏☺😊😆😄😅😁thank you so much....
Eric Wong (2 years ago)
Your lessons, help me score well in my assignments..
misozi namonje (2 years ago)
Your lessons are awesome thanks
Afra HU (2 years ago)
you helped me a lot! Great video !
Stefania Corti (3 years ago)
OMG, I was going crazy with this concept in the book. You were so clear, in just few minutes!! Thank you so much :)
Commander Erik (3 years ago)
Sir i want just you to know that if i passed both of my micro and marcecon classes then it's all because of you! Because i am taking macro and micro econ with the same profs, and he has bad handwriting and he jumps here and there that makes me lost as hell in class, and he tends to drag things too long which doesn't fit in my attention span. I like your teaching style how it's short and sweet and CLEAR, I can learn much more things in much lesser amount of time here than in class. 4 mins of your video is more than 2 hrs of my econ classes. Now i don't even bother to listen in class anymore since he gets me lost just 5 mins into the class, i don't write down his note too since i can't recognize what he writes on the board, all i do is come back home and watch your videos and within a few mins i'll be good to go. Thanks again! Most of my classmates can't tell what his writing on the board, and most of us will get discouraged, and i told them about your videos, and they told me i saved their asses! LOL.
Unopa Motlhabane (3 years ago)
This video just saved my life, hehehe... <3 *feeling educated*
Joonho Kim (3 years ago)
This guy is the real mvp. #LikeForDecroly
Wasif Naushad (3 years ago)
I have a question when the LRAS shifts to the right. What happens? Output increases in the long run and does inflation decrease also?
Amelia (3 years ago)
Thank you for the great video but one question.. what would happen if the AS curve had shifted not the AD then how would the economy self correct?
Inspirare (3 years ago)
+Amelia Stehrenberger Let's say that the SRAS curve shifts leftward due to an increase in oil prices. This would increase production costs for the economy as a whole, thus it would shift SRAS to the left. In this case, there is no 'self-correcting' mechanism. SRAS will shift back to its original position once oil prices go back to normal.
Yasmine Arida (3 years ago)
thank you so much foe these videos they are very very usefull!!
mimz10583 (3 years ago)
my ib econ textbook says its a deflationary/inflationary gap instead of a recessionary but are they interchangeable?
Inspirare (3 years ago)
+mimz10583 From someone who has completed IB Economics: they are not exactly interchangeable. When you have a deflationary gap caused by a reduction in AD, you can call it a recessionary gap. But when you have an inflationary gap caused by an increase in AD, you must call it an inflationary gap. Additionally, if SRAS is reduced, then IB calls it stagflation and not an inflationary gap. Hope that clears things up, and good luck on your exam!
dania bassam (3 years ago)
+mimz10583 deflationary gap is recessionary gap. same thing, different name.
dania bassam (3 years ago)
+mimz10583 our exam is after two daysssssssss

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