Examples identifying conditions for inference on two proportions

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Language: en

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- [Instructor] A sociologist suspects

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that men are more likely to have received

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a ticket for speeding than women are.

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The sociologist wants to sample people

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and create a two-sample Z interval,

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in other videos we
introduced what that idea is,

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to estimate the difference

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between the proportion of men

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who have received a speeding ticket

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and the proportion of women

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who have received a speeding ticket.

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Which of the following are conditions

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for this type of interval?

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Choose all answers that apply.

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So, like always pause this video

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and see if you can answer it on your own.

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All righty, let's review our
conditions for inference.

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So, you have your random condition

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and these are the same ones

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that we have talked about

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when we were dealing with one sample

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but now we just have to make sure

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that it applies to both samples,

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that both samples we feel
good are randomly selected.

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The second one is the normal condition

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and this is to feel good

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that the sampling distribution
of the sample proportion

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for each of the samples is roughly normal

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and so, what you have to do

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is you take the sample size

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of the first sample times
the sample proportion

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of the first sample

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and that needs to be
greater than or equal to 10.

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You take the sample
size of the first sample

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times one minus the sample
proportion of the first sample,

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that should also be greater
than or equal to 10.

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Another way to think about it

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is your best sense of the
expected number of successes

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and failures should be
greater than or equal to 10

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and then you do this
with the second sample.

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So, the sample size of the second sample,

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these don't have to be the same,
times the sample proportion

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of the second sample

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should be greater than
or equal to 10 as well

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and the sample size of the
second sample times one

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minus the sample proportion
of the second sample,

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that needs to be greater
than or equal to 10.

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This is has to and,

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all of this needs to be true

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and then the final one is
the independence condition.

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And we meet that if
individual observations

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in these samples are done with replacement

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or if even they're not
done with replacement

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but if the samples are no more
that 10% of the population

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then we meet the independence condition

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and once again, you've seen this before,

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we're now just doing it with two samples.

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So, let's see.

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Which of the following are conditions

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for this type of interval?

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So, the samples both
include at least 10 people

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who have received a speeding ticket

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and at least 10 people who haven't.

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Yeah, that's right.

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This is, you could view
this as the expected number

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of people who have
received a speeding ticket

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and this is the expected number of people

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who haven't received a speeding ticket

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or an estimate of the expected number

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because we're using the sample proportion

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instead of the true proportion.

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So, these need to be
greater than or equal to 10

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in both samples.

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So, this is absolutely true.

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The people in each sample

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can be considered independent.

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Yeah, we have that independence condition.

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Either they're sampled with replacement

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or we are sampling no more
than 10% of the population,

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so this is important.

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And then last but not least

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they take separate random samples

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of men and women.

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Yeah, that's the random
condition right over here.

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So, they have all three
of them right over here.

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We have our normal condition,

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our independent condition

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and our random condition.

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Let's do another example.

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A biologist is studying a certain disease

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affecting oak tress in a forest.

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They are curious if there's a difference

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in the proportion of trees

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that are infected in the
North and South sections

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of the forest.

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They want to take a sample of trees

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from each section

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and do a two-sample Z test

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to test their hypotheses.

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Which of the following are conditions

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for this type of test?

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So, pause the video again

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and see if you can answer this.

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Okay, so we've already
reviewed our conditions

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for inference, so let's see which of these

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are the actual conditions for inference.

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So, both samples include at 30 trees.

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So, this might have been tempting

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because this 30 number shows up

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when we're thinking about conditions

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for inference when
we're dealing with means

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but this does not come up

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when we're dealing with proportions.

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Both samples do not need
to include at 30 trees,

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so this would not be one of our choices.

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They sample an equal number of tress

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from each region of the forest.

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This is a very common misconception

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that when you're doing a two-sample Z test

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or when you're doing a
two-sample Z interval

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or confidence interval

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that both samples have to
have the same sample size

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but that is actually not the case.

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So, we can rule that one out.

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They observe at least 10 trees

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with the disease

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and at least 10 trees without the disease

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in each sample.

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Yes, this is the normal condition

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that we just looked at,

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so this would be our only
choice and we're done.


Confidence intervals for the difference between two proportions

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Language: en

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- [Instructor] Let's review calculating

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confidence intervals for proportions.

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So let's say I have a population,

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and I care about some proportion.

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Let's say I care about the proportion

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of folks that are left-handed.

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I don't know what that is,

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and so I take a sample of size n,

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and then from that sample,

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I can calculate a sample proportion.

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That's why I put that
little hat on top of it.

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It's a sample proportion that's estimating

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our true proportion.

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Now I wanna construct
a confidence interval,

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but before I go down the path,

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I need to actually set up
my conditions for inference,

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make sure that I meet them.

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And we've done this many times.

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So the first condition for inference

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is the random condition.

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I need to feel good that
this is truly a random sample

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from the population.

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The second one is often known
as the normal condition,

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and that's the condition that hey,

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in order to feel like
the sampling distribution

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for the sample proportions
is roughly normal,

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n times our sample proportion

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should be greater than or equal to 10

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and n times one minus
our sample proportion

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should be greater than or equal to 10.

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We've seen that multiple times before.

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And then the third one is
the independence condition,

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and there's two ways to meet this.

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Either the individual
observations in our sample

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should be done with replacement

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or if it's not done with replacement,

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we can feel pretty confident about this

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if our sample size is no more than 10%

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of the size of the entire population.

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But let's say that we meet
these conditions for inference,

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what do we do?

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Well we come up, we set
up a confidence level,

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confidence level,

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for our confidence interval
that we're about to construct.

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And let's say we said it
was a 95% confidence level.

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That would mean that 95% of the time

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that we went through this exercise,

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the confidence interval that we get would

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actually overlap with the
true population proportion.

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And 95% is actually a fairly typical one.

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But from that confidence level,

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you can calculate a critical value.

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And the way that you do that,

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you just look up in a z-table,

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and once again all of this is review.

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You would say hey how
many standard deviations

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above and below the mean
of a normal distribution

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would you need to go in order to

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get say 95%, that confidence
level of the distribution.

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And now we're ready to calculate
the confidence interval,

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confidence interval.

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It is going to be equal to

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our sample proportion

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plus or minus our critical value,

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our critical value,

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times the standard deviation

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of the sampling distribution

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of the sample proportion.

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Now there is a way to
calculate this exactly

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if we knew what p is.

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If we knew what p is,

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this would be the square root
of p times one minus p over n.

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But if we knew what p is,

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then we wouldn't even
have to do this business

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of constructing confidence intervals.

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So instead, we estimate this.

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We say look, an estimate
of the standard deviation

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of the sampling distribution,

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often known as the standard error,

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an estimate of this is going to be

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the square root of,

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instead of the true population parameter,

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we could use the sample proportion.

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So p hat times one minus p hat,

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all of that over n.

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Now the whole reason why I did this,

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this is covered in much
more detail and much slower

00:03:28.470 --> 00:03:29.303
in other videos,

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is to see the parallels
between this and a situation

00:03:32.050 --> 00:03:35.040
when we're constructing a
two-sample confidence interval

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or z-interval for a difference
between proportions.

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What am I talking about?

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Well let's say that you have
two different populations.

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So this is the first population,

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and it has some true
proportion of the folks

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that let's say are left-handed,

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and then there's another population.

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So let's call that p two.

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You know maybe this is

00:03:59.820 --> 00:04:02.140
freshmen in your high school or college

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and maybe this is sophomores,

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so two different populations,

00:04:04.920 --> 00:04:08.240
and you wanna see if
there's a difference between

00:04:08.240 --> 00:04:10.670
the proportion that are left-handed, say.

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And so what you could do,

00:04:12.760 --> 00:04:14.080
just like we've done here,

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is for each of these populations,

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you'll take a sample here,
we'll call that n one,

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and then from that sample you calculate

00:04:22.130 --> 00:04:25.140
a sample proportion,
let's call that p one.

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And then from this second population,

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we do the same thing.

00:04:28.070 --> 00:04:29.710
This is n two.

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Notice n one and n two do not have to be

00:04:32.110 --> 00:04:33.540
the same sample size.

00:04:33.540 --> 00:04:35.700
That's a common misconception
when doing these things.

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These could be different sample sizes.

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And then from that sample,

00:04:39.190 --> 00:04:42.260
you calculate the sample proportion.

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Now after you do that,

00:04:43.450 --> 00:04:45.460
you would wanna check your
conditions for inference.

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And it turns out that the
conditions for inference

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would be exactly the same.

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Do both of these samples
meet the random condition?

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Do both of these samples
meet the normal condition?

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And do both of these samples

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meet the independence condition?

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And if both samples meet these
conditions for inference,

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then we would have to
calculate our critical value.

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And you would do it the exact same way.

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I'll just write it down again.

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So first, you need to check all of these.

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Then you would take your confidence level,

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confidence level,

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and from that get a critical z.

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And then you're ready to
say what your confidence

00:05:20.537 --> 00:05:22.040
interval's going to be.

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So your confidence,

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confidence interval,

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interval for p one

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minus p two, so it's
the confidence interval

00:05:33.720 --> 00:05:34.700
for the difference

00:05:34.700 --> 00:05:39.660
between these true population proportions.

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That is going to be
equal to the difference

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between your sample proportions,

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so p hat one minus p hat two,

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p hat two, plus or minus,

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plus or minus your critical
value right over here

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times the standard deviation

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of the sampling distribution
of the difference

00:06:06.430 --> 00:06:08.700
between the sample proportions.

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So it would be p hat one minus

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p hat two.

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And so we already know
how to calculate this,

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how to calculate this,
how to calculate this.

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How do we calculate that?

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Well I will just give
you the formula first,

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but then we just have to appreciate

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that this just comes outta the properties

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of standard deviations and variances

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that we have studied in the past.

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So the standard deviation

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of the sampling distribution

00:06:38.530 --> 00:06:41.210
of the difference between
the sample proportions,

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it is a mouthful,

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this is going to be
approximately equal to,

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approximately equal to the square root

00:06:51.020 --> 00:06:56.020
of p hat one times one minus p hat one

00:06:56.800 --> 00:07:00.360
over n one, over n one,

00:07:00.360 --> 00:07:04.460
plus, plus, p hat two

00:07:04.460 --> 00:07:07.220
times one minus p hat two

00:07:07.220 --> 00:07:09.560
over n two.

00:07:09.560 --> 00:07:10.720
And then you put that there.

00:07:10.720 --> 00:07:12.730
You have constructed
your confidence interval.

00:07:12.730 --> 00:07:14.990
And once again how would
you interpret that?

00:07:14.990 --> 00:07:18.280
Well let's say your
confidence level is 90%,

00:07:18.280 --> 00:07:19.710
and from that you're able to construct

00:07:19.710 --> 00:07:20.543
this confidence interval.

00:07:20.543 --> 00:07:22.300
That would mean that 90% of the time

00:07:22.300 --> 00:07:24.040
that you go through this exercise,

00:07:24.040 --> 00:07:26.180
your confidence interval would overlap

00:07:26.180 --> 00:07:28.040
with the true difference

00:07:28.040 --> 00:07:30.680
between these population parameters,

00:07:30.680 --> 00:07:34.500
the true difference between
these population proportions.

00:07:34.500 --> 00:07:36.840
Now where did this thing come from?

00:07:36.840 --> 00:07:39.970
Well you might notice
some similarities here.

00:07:39.970 --> 00:07:42.070
This part over here

00:07:42.070 --> 00:07:45.870
is an estimate or it's
approximately equal to

00:07:45.870 --> 00:07:49.090
the variance of the sampling distribution

00:07:49.090 --> 00:07:53.180
of the sample proportion
for our first population.

00:07:53.180 --> 00:07:56.030
And then this right over here

00:07:56.030 --> 00:07:59.260
once again is approximately
going to be equal

00:07:59.260 --> 00:08:03.500
to the variance of the
sampling distribution

00:08:03.500 --> 00:08:06.060
for the sample proportions
for this population,

00:08:06.060 --> 00:08:07.443
for p two.

00:08:08.340 --> 00:08:09.600
How did I know that?

00:08:09.600 --> 00:08:12.310
Well look if this is approximately
the standard deviation,

00:08:12.310 --> 00:08:15.310
you square that, you
approximately get the variance.

00:08:15.310 --> 00:08:16.810
And so the big takeaway is,

00:08:16.810 --> 00:08:20.060
is that the variance for
the sampling distribution

00:08:20.060 --> 00:08:22.210
of the difference is just the sum

00:08:22.210 --> 00:08:25.000
of the variances of each of
those sampling distributions.

00:08:25.000 --> 00:08:26.440
That's a lotta big mouthful and I know

00:08:26.440 --> 00:08:28.550
it can get confusing, but
hopefully that makes sense.

00:08:28.550 --> 00:08:30.250
And that's where this formula comes from,

00:08:30.250 --> 00:08:33.360
and so it's really not
that much more to remember.

00:08:33.360 --> 00:08:35.940
In the next few videos we're
gonna do many more examples,

00:08:35.940 --> 00:08:37.900
both looking at these conditions

00:08:37.900 --> 00:08:41.903
and calculating confidence
intervals and critical values.


American attitudes about government and politics

WEBVTT
Kind: captions
Language: en

00:00:00.130 --> 00:00:01.620
- What we're going to do in this video

00:00:01.620 --> 00:00:04.486
is think about how the core beliefs

00:00:04.486 --> 00:00:07.130
of U.S. citizens impacts their views

00:00:08.083 --> 00:00:10.820
on the role of government.

00:00:10.820 --> 00:00:11.700
And what I'm gonna do

00:00:11.700 --> 00:00:13.150
is talk about a few core beliefs

00:00:13.150 --> 00:00:15.680
that are often associated
with the United States,

00:00:15.680 --> 00:00:16.900
but taken with a grain of salt.

00:00:16.900 --> 00:00:18.320
It's obviously a very large

00:00:18.320 --> 00:00:19.560
and a very diverse country

00:00:19.560 --> 00:00:22.390
where people have many,
many, many beliefs.

00:00:22.390 --> 00:00:24.570
Now one thing that often gets associated

00:00:24.570 --> 00:00:25.880
with the United States

00:00:25.880 --> 00:00:28.600
is this idea of self-reliance.

00:00:28.600 --> 00:00:30.790
Self-reliance.

00:00:30.790 --> 00:00:33.330
Or sometimes would be
called individualism,

00:00:33.330 --> 00:00:36.750
or these are related ideas, individualism.

00:00:36.750 --> 00:00:38.800
And this is the idea that, hey look,

00:00:38.800 --> 00:00:41.750
an individual, if people
don't get in their way,

00:00:41.750 --> 00:00:44.290
can take care of themselves,

00:00:44.290 --> 00:00:46.460
that the goals of that individual

00:00:46.460 --> 00:00:48.820
should sometimes or often trump those

00:00:48.820 --> 00:00:51.170
of the collective, or say the government.

00:00:51.170 --> 00:00:52.210
And so you can imagine,

00:00:52.210 --> 00:00:53.890
someone who has a strong core belief

00:00:53.890 --> 00:00:56.020
in self-reliance or individualism,

00:00:56.020 --> 00:00:58.300
they would want a limited government.

00:00:58.300 --> 00:00:59.210
They would say hey government,

00:00:59.210 --> 00:01:00.230
just get out of my way

00:01:00.230 --> 00:01:02.280
and I can take care of myself.

00:01:02.280 --> 00:01:03.870
Now, a related idea to that,

00:01:03.870 --> 00:01:06.580
but this would be going
into the corporate realm

00:01:06.580 --> 00:01:08.040
or the entrepreneurial realm,

00:01:08.040 --> 00:01:10.700
is the idea of free enterprise.

00:01:10.700 --> 00:01:13.140
Free enterprise.

00:01:13.140 --> 00:01:15.200
And this is the idea that, hey,

00:01:15.200 --> 00:01:18.130
we can generate wealth,
we can create things,

00:01:18.130 --> 00:01:21.480
we can innovate, once
again, if enterprise,

00:01:21.480 --> 00:01:23.140
if entrepreneurial activity,

00:01:23.140 --> 00:01:25.530
is left to its own devices.

00:01:25.530 --> 00:01:27.330
Now, once again, this core belief

00:01:27.330 --> 00:01:28.730
in free enterprise

00:01:28.730 --> 00:01:30.790
would probably favor a limited government.

00:01:30.790 --> 00:01:32.540
Hey government, just get outta my way.

00:01:32.540 --> 00:01:34.640
The more that you get involved,

00:01:34.640 --> 00:01:36.350
that just slows things down.

00:01:36.350 --> 00:01:38.840
That just is a wet
blanket on the creativity

00:01:38.840 --> 00:01:40.730
and on the wealth
creation that we could do,

00:01:40.730 --> 00:01:42.540
left to our own devices.

00:01:43.490 --> 00:01:46.490
Now, another idea is that of

00:01:46.490 --> 00:01:48.240
equality of opportunity,

00:01:48.240 --> 00:01:50.860
often associated with the United Sates,

00:01:50.860 --> 00:01:53.110
equality of opportunity.

00:01:53.950 --> 00:01:56.560
And this goes to the
roots of the United States

00:01:56.560 --> 00:01:59.030
where we don't have a formal nobility,

00:01:59.030 --> 00:02:01.510
obviously, we don't
have things like kings.

00:02:01.510 --> 00:02:03.450
That the country started off,

00:02:03.450 --> 00:02:05.080
obviously there's some major exceptions

00:02:05.080 --> 00:02:06.830
around things like slavery,

00:02:06.830 --> 00:02:10.360
but the country took pride in ideas

00:02:10.360 --> 00:02:11.860
of equality of oppurtunity.

00:02:11.860 --> 00:02:12.693
And to some degree,

00:02:12.693 --> 00:02:14.620
they feed into these
first two bullet points,

00:02:14.620 --> 00:02:17.290
that if there truly is
equality of oppurtunity,

00:02:17.290 --> 00:02:18.970
it kind of backs up the idea that,

00:02:18.970 --> 00:02:20.360
hey, let's just let people

00:02:20.360 --> 00:02:22.080
take care of themselves.

00:02:22.080 --> 00:02:24.160
Now on the other hand,
someone who really cares

00:02:24.160 --> 00:02:25.300
about equality of opportunity

00:02:25.300 --> 00:02:27.080
might say, well, hold on a second,

00:02:27.080 --> 00:02:30.360
not everyone is born into
the same circumstance.

00:02:30.360 --> 00:02:32.690
And because of that, if you truly care

00:02:32.690 --> 00:02:34.550
about equality of oppurtunity,

00:02:34.550 --> 00:02:37.230
there might be a role for
the government to play

00:02:37.230 --> 00:02:40.040
in helping to level that
playing field a bit.

00:02:40.040 --> 00:02:41.700
So these folks might not want

00:02:41.700 --> 00:02:44.560
as limited of a government
as some of the folks

00:02:44.560 --> 00:02:45.870
who are strongly in the camp

00:02:45.870 --> 00:02:48.650
of self-reliance or individualism.

00:02:48.650 --> 00:02:50.700
Now the fourth core belief I'll talk about

00:02:50.700 --> 00:02:52.200
and that is the rule of law.

00:02:53.486 --> 00:02:55.550
Rule of law.

00:02:55.550 --> 00:02:57.900
Now, any country, in order to function,

00:02:57.900 --> 00:02:59.670
needs a rule of law.

00:02:59.670 --> 00:03:01.320
But one thing that the United States

00:03:01.320 --> 00:03:02.720
takes pride in itself,

00:03:02.720 --> 00:03:04.020
and I think the United States citizens

00:03:04.020 --> 00:03:05.960
take pride in itself, is that, hey look,

00:03:05.960 --> 00:03:07.300
if there's going to be a contract

00:03:07.300 --> 00:03:08.190
between individuals,

00:03:08.190 --> 00:03:10.200
people will uphold that contract,

00:03:10.200 --> 00:03:12.310
that because of a solid rule of law,

00:03:12.310 --> 00:03:13.670
it's less likely that people

00:03:13.670 --> 00:03:15.080
will get away with crimes.

00:03:15.080 --> 00:03:16.260
And there are examples

00:03:16.260 --> 00:03:17.560
that you could look around the world

00:03:17.560 --> 00:03:19.380
where people might have less faith

00:03:19.380 --> 00:03:20.570
in the rule of law.

00:03:20.570 --> 00:03:21.444
Well,

00:03:21.444 --> 00:03:22.277
(mumbles)

00:03:22.277 --> 00:03:23.110
people are getting away with stuff

00:03:23.110 --> 00:03:24.840
or if I get into an
agreement with someone,

00:03:24.840 --> 00:03:25.673
there's no way

00:03:25.673 --> 00:03:27.680
that I can really enforce that agreement.

00:03:27.680 --> 00:03:29.200
And so the rule of law,

00:03:29.200 --> 00:03:32.180
this would argue for
some role of government,

00:03:32.180 --> 00:03:34.990
but it depends how focused or how limited

00:03:34.990 --> 00:03:38.220
of a rule of law people's
core beliefs are.

00:03:38.220 --> 00:03:40.020
And to make these core beliefs

00:03:40.020 --> 00:03:41.450
and their impact on government

00:03:41.450 --> 00:03:42.790
a little bit more tangible,

00:03:42.790 --> 00:03:45.530
I have some quotes from
some notable Americans.

00:03:45.530 --> 00:03:47.590
Now several of these are Presidents,

00:03:47.590 --> 00:03:49.360
but their views are really indicative

00:03:49.360 --> 00:03:52.670
of broader views in the
American population.

00:03:52.670 --> 00:03:54.210
So, this first one comes from

00:03:54.210 --> 00:03:58.000
President Ronald Reagan and he said,

00:03:58.000 --> 00:04:01.430
Government's first duty
is to protect the people,

00:04:01.430 --> 00:04:04.090
not run their lives.

00:04:04.090 --> 00:04:06.670
So which core beliefs do
you think Ronald Reagan

00:04:06.670 --> 00:04:08.090
is representing here?

00:04:09.330 --> 00:04:10.530
Well, when I look at this,

00:04:10.530 --> 00:04:12.950
it seems like he doesn't
want the government

00:04:12.950 --> 00:04:15.120
to really mess with people's lives,

00:04:15.120 --> 00:04:17.410
he's really talking about self-reliance,

00:04:17.410 --> 00:04:20.240
individualism, free enterprise.

00:04:20.240 --> 00:04:22.490
And he is making some reference,

00:04:22.490 --> 00:04:25.420
that look, there is a duty
to protect the people.

00:04:25.420 --> 00:04:27.700
So he's saying you do need the government

00:04:27.700 --> 00:04:29.650
to enforce the rule of law,

00:04:29.650 --> 00:04:32.360
but he seems to favor a limited government

00:04:32.360 --> 00:04:35.060
and he, indeed, did favor
a limited government

00:04:35.060 --> 00:04:37.100
that does not get in the way of, say,

00:04:37.100 --> 00:04:39.200
free enterprise or people's ability

00:04:39.200 --> 00:04:41.120
to be self-reliant.

00:04:41.120 --> 00:04:41.953
Now, some would argue

00:04:41.953 --> 00:04:43.650
on the other end of the spectrum,

00:04:43.650 --> 00:04:46.560
here is a quote from Franklin Roosevelt,

00:04:46.560 --> 00:04:48.470
in which he said,

00:04:49.940 --> 00:04:52.910
Not only our future economic soundness

00:04:52.910 --> 00:04:54.240
but the very soundness

00:04:54.240 --> 00:04:56.360
of our democratic institutions

00:04:56.360 --> 00:04:59.220
depends on the determination
of our government

00:04:59.220 --> 00:05:03.150
to give employment to idle men.

00:05:03.150 --> 00:05:05.360
So, FDR here, is talking about

00:05:05.360 --> 00:05:06.810
a very active government,

00:05:06.810 --> 00:05:08.850
not the type of limited government

00:05:08.850 --> 00:05:10.930
that Ronald Reagan seems to allude to.

00:05:10.930 --> 00:05:11.860
Here, he's saying that

00:05:11.860 --> 00:05:13.180
it's the job of the government,

00:05:13.180 --> 00:05:14.250
and remember the context here

00:05:14.250 --> 00:05:17.100
is FDR was President
during the Great Depression

00:05:17.100 --> 00:05:19.700
and the beginning of World War II,

00:05:19.700 --> 00:05:21.080
and during the Great Depression

00:05:21.080 --> 00:05:22.770
you had massive unemployment,

00:05:22.770 --> 00:05:23.603
and he's saying look,

00:05:23.603 --> 00:05:26.490
not only the future of
our economic soundness

00:05:26.490 --> 00:05:28.050
but the very soundness

00:05:28.050 --> 00:05:31.390
of our democratic institutions depends on

00:05:31.390 --> 00:05:32.590
the determination of the government

00:05:32.590 --> 00:05:35.200
to give employment to these men.

00:05:35.200 --> 00:05:37.150
Now, his argument might have been look,

00:05:37.150 --> 00:05:38.452
if we don't give employment,

00:05:38.452 --> 00:05:41.340
then you could have a
revolution on your hands,

00:05:41.340 --> 00:05:42.864
then people are gonna lose faith

00:05:42.864 --> 00:05:45.360
in this idea of the United States,

00:05:45.360 --> 00:05:47.960
they're gonna lose
faith in the government.

00:05:47.960 --> 00:05:48.793
Now, on the other hand,

00:05:48.793 --> 00:05:49.900
some people might say the whole reason

00:05:49.900 --> 00:05:51.150
why we were in that mess

00:05:51.150 --> 00:05:53.060
is that the government
was intervening too much

00:05:53.060 --> 00:05:55.210
and the more that the
government intervenes,

00:05:55.210 --> 00:05:57.960
it actually might not
allow free enterprise

00:05:57.960 --> 00:06:01.290
to naturally solve the economic situation

00:06:01.290 --> 00:06:03.350
that we were in at the time.

00:06:03.350 --> 00:06:05.880
But, once again, Franklin
Roosevelt seemed to be

00:06:05.880 --> 00:06:07.520
a little bit less on self-reliance

00:06:07.520 --> 00:06:08.353
cause he said, look,

00:06:08.353 --> 00:06:09.760
these people aren't gonna
find jobs on their own,

00:06:09.760 --> 00:06:12.010
the government needs to get them jobs.

00:06:12.010 --> 00:06:13.590
Now here's another viewpoint.

00:06:13.590 --> 00:06:16.480
This is from President Barack Obama.

00:06:16.480 --> 00:06:17.770
And here, President Obama says,

00:06:17.770 --> 00:06:20.370
The internet didn't get
invented in its own.

00:06:20.370 --> 00:06:22.330
Government research created the Internet

00:06:22.330 --> 00:06:23.640
so that all the companies

00:06:23.640 --> 00:06:25.690
could make money off the Internet.

00:06:25.690 --> 00:06:28.600
The point is, is that when we succeed,

00:06:28.600 --> 00:06:31.670
we succeed because of our
individual initiative,

00:06:31.670 --> 00:06:35.020
but also because we do things together.

00:06:35.020 --> 00:06:36.865
So this is an interesting argument.

00:06:36.865 --> 00:06:38.220
When he's saying this,

00:06:38.220 --> 00:06:40.750
he's clearly making
reference to these ideas

00:06:40.750 --> 00:06:44.410
of individualism and free enterprise

00:06:44.410 --> 00:06:46.530
that are strong core beliefs

00:06:46.530 --> 00:06:47.550
in the United States.

00:06:47.550 --> 00:06:50.260
This individualism is, we succeed

00:06:50.260 --> 00:06:52.510
because of our individual initiative

00:06:52.510 --> 00:06:53.840
and free enterprise.

00:06:53.840 --> 00:06:54.890
These companies

00:06:54.890 --> 00:06:57.220
that are making money off the Internet,

00:06:57.220 --> 00:06:58.070
but his point is

00:06:58.070 --> 00:07:00.870
that these things didn't
happen on their own,

00:07:00.870 --> 00:07:02.490
that, at least in this case,

00:07:02.490 --> 00:07:06.130
the Internet was started
as a government project.

00:07:06.130 --> 00:07:07.590
You had DARPANET and ARPANET,

00:07:07.590 --> 00:07:10.070
which eventually evolved into the Internet

00:07:10.070 --> 00:07:12.010
so that free enterprise could take over

00:07:12.010 --> 00:07:14.440
and, frankly, allow you
to watch this video.

00:07:14.440 --> 00:07:16.180
He's saying that the
government actually does

00:07:16.180 --> 00:07:18.240
have a role here and because of that role

00:07:18.240 --> 00:07:19.940
that the government has played,

00:07:19.940 --> 00:07:21.580
it has actually allowed things

00:07:21.580 --> 00:07:22.950
like self-reliance,

00:07:22.950 --> 00:07:25.040
individualism, and free enterprise

00:07:25.040 --> 00:07:27.370
to flourish even more.

00:07:27.370 --> 00:07:29.760
And last but not least,
I'll give you a quote

00:07:29.760 --> 00:07:32.580
from famous conservative economist,

00:07:32.580 --> 00:07:33.450
Milton Friedman.

00:07:33.450 --> 00:07:35.160
He used to be a professor

00:07:35.160 --> 00:07:39.920
at the University of Chicago and he said,

00:07:39.920 --> 00:07:42.450
Government has three primary functions.

00:07:42.450 --> 00:07:43.370
It should provide

00:07:43.370 --> 00:07:45.320
for military defense of the nation.

00:07:45.320 --> 00:07:48.230
It should enforce contracts
between individuals.

00:07:48.230 --> 00:07:50.270
It should protect citizens from crimes

00:07:50.270 --> 00:07:52.460
against themselves or their property.

00:07:52.460 --> 00:07:53.980
And so Milton Friedman, here,

00:07:53.980 --> 00:07:57.250
is clearly advocating
for a limited government.

00:07:57.250 --> 00:07:58.815
In terms of his core beliefs,

00:07:58.815 --> 00:08:00.380
clearly from this statement,

00:08:00.380 --> 00:08:02.870
he says, look, a rule of law is necessary.

00:08:02.870 --> 00:08:05.570
You have to have your
contracts between citizens,

00:08:05.570 --> 00:08:06.620
you need to protect citizens

00:08:06.620 --> 00:08:08.640
from crimes against
themselves or their property.

00:08:08.640 --> 00:08:10.160
If you read more Milton Friedman quotes

00:08:10.160 --> 00:08:10.993
and I encourage you to,

00:08:10.993 --> 00:08:12.010
regardless of where you are

00:08:12.010 --> 00:08:13.700
on the philosophical spectrum,

00:08:13.700 --> 00:08:15.290
they're all quite interesting.

00:08:15.290 --> 00:08:17.830
He has a strong underlying core belief

00:08:17.830 --> 00:08:20.150
in self-reliance, individualism,

00:08:20.150 --> 00:08:21.690
and free enterprise.

00:08:21.690 --> 00:08:22.960
But I'll leave you there.

00:08:22.960 --> 00:08:23.970
Think about it on your own.

00:08:23.970 --> 00:08:25.160
How does the core belief

00:08:25.160 --> 00:08:27.210
of a United States citizen,
including yourself,

00:08:27.210 --> 00:08:29.170
how does that impact your view

00:08:29.170 --> 00:08:30.830
of the role of government?


Judicial activism and judicial restraint

WEBVTT
Kind: captions
Language: en

00:00:00.170 --> 00:00:01.930
- What we're gonna do
in this video is talk

00:00:01.930 --> 00:00:06.300
about the terms judicial
activism and judicial restraint.

00:00:06.300 --> 00:00:07.600
In many videos, we have talked

00:00:07.600 --> 00:00:11.420
about how the judicial branch,
one of its main powers,

00:00:11.420 --> 00:00:14.490
is to be a check on the
executive and legislative branch,

00:00:14.490 --> 00:00:17.230
that it can exercise
judicial review over them.

00:00:17.230 --> 00:00:19.800
It can say that a legislative
action, that a law,

00:00:19.800 --> 00:00:21.920
that a statute is unconstitutional.

00:00:21.920 --> 00:00:24.340
It can say that an executive action,

00:00:24.340 --> 00:00:26.680
say a rule or regulation
or an executive order,

00:00:26.680 --> 00:00:28.760
is unconstitutional,

00:00:28.760 --> 00:00:30.270
but as it's doing that,

00:00:30.270 --> 00:00:32.890
as it's exercising its judicial review,

00:00:32.890 --> 00:00:34.710
how does it go about doing that?

00:00:34.710 --> 00:00:38.330
And this term judicial
activism was first introduced

00:00:38.330 --> 00:00:39.490
by Arthur Schlesinger,

00:00:39.490 --> 00:00:41.140
who we've talked about in other videos,

00:00:41.140 --> 00:00:44.810
and it's meant to imply a judiciary

00:00:44.810 --> 00:00:48.950
that is not strictly just ruling based

00:00:48.950 --> 00:00:51.470
on maybe what the Constitution says

00:00:51.470 --> 00:00:54.440
but also their own personal ideas.

00:00:54.440 --> 00:00:57.760
So personal views.

00:00:57.760 --> 00:00:59.820
It sometimes has an implication

00:00:59.820 --> 00:01:02.710
that the judges are
overreaching in some way.

00:01:02.710 --> 00:01:04.970
Some people might say, and
this would be a little bit

00:01:04.970 --> 00:01:08.780
of a negative, "legislating
from the bench."

00:01:08.780 --> 00:01:13.780
Legislating from the bench,

00:01:15.000 --> 00:01:16.190
and you'll often hear is that,

00:01:16.190 --> 00:01:18.930
"Hey, that judge or that
court is legislating

00:01:18.930 --> 00:01:20.270
"from the bench," from the people

00:01:20.270 --> 00:01:21.630
who don't like their ruling.

00:01:21.630 --> 00:01:23.030
They're saying, "Hey,
they're not strictly looking

00:01:23.030 --> 00:01:23.863
"at the law.

00:01:23.863 --> 00:01:25.710
"They're trying to make their own laws

00:01:25.710 --> 00:01:27.710
"through their rulings."

00:01:27.710 --> 00:01:29.810
Now some would say that it's necessary

00:01:29.810 --> 00:01:31.900
for the judicial to do this

00:01:31.900 --> 00:01:35.950
because they are
interpreting the Constitution

00:01:35.950 --> 00:01:37.730
in the world as it is,

00:01:37.730 --> 00:01:40.620
and the world that we
are in changes over time.

00:01:40.620 --> 00:01:44.310
So it is really a form
of positive activism,

00:01:44.310 --> 00:01:45.760
that they are defending liberties,

00:01:45.760 --> 00:01:46.910
that they are defending rights,

00:01:46.910 --> 00:01:49.970
especially in the social
context that we're in.

00:01:49.970 --> 00:01:51.450
I'll leave you to decide

00:01:51.450 --> 00:01:53.770
whether you think this
is a good idea or not.

00:01:53.770 --> 00:01:57.000
Now judicial restraint
is the opposite of it.

00:01:57.000 --> 00:01:59.720
This is a situation where the judges

00:01:59.720 --> 00:02:02.565
or the courts limit their power,

00:02:02.565 --> 00:02:06.160
so limit their own power,

00:02:06.160 --> 00:02:08.700
their own power,

00:02:08.700 --> 00:02:09.533
where they say,

00:02:09.533 --> 00:02:12.730
"Hey, look, our job is to just
be the umpire or the referee.

00:02:12.730 --> 00:02:14.750
"Our job is not to make new rules,

00:02:14.750 --> 00:02:16.470
"and so we are just
going to strictly think

00:02:16.470 --> 00:02:18.810
"about whether something is constitutional

00:02:18.810 --> 00:02:21.420
"or whether it is not,"

00:02:21.420 --> 00:02:24.160
and one of the most seminal cases

00:02:24.160 --> 00:02:28.230
on judicial activism versus
judicial restraint happened

00:02:28.230 --> 00:02:30.060
in the early 1960s,

00:02:30.060 --> 00:02:33.040
and that is the case of Baker versus Carr,

00:02:33.040 --> 00:02:36.650
and so what happens is is
that Baker is a resident

00:02:36.650 --> 00:02:38.580
of Shelby County, Tennessee.

00:02:38.580 --> 00:02:41.620
He was actually of the former
mayor of a town outside

00:02:41.620 --> 00:02:44.170
of Memphis, which is in
this area right over here,

00:02:44.170 --> 00:02:46.250
and he says that,

00:02:46.250 --> 00:02:49.260
"Look, the state is not reapportioning

00:02:49.260 --> 00:02:51.640
"its legislative districts
the way it should be,"

00:02:51.640 --> 00:02:55.550
that in general every 10
years there is a census,

00:02:55.550 --> 00:02:57.700
and based on that, we
have been understanding

00:02:57.700 --> 00:02:59.250
of where the population sits,

00:02:59.250 --> 00:03:02.950
and then the state should be
reapportioning districts based

00:03:02.950 --> 00:03:04.130
on population,

00:03:04.130 --> 00:03:06.270
but what Baker argued is is that the state

00:03:06.270 --> 00:03:10.100
of Tennessee actually did
not redistrict since 1901,

00:03:10.100 --> 00:03:12.450
after the census of 1900,

00:03:12.450 --> 00:03:15.330
and it was now the early 1960s,

00:03:15.330 --> 00:03:16.970
and he says because of that,

00:03:16.970 --> 00:03:19.090
and he invoked the 14th amendment,

00:03:19.090 --> 00:03:21.680
you weren't getting equal protection,

00:03:21.680 --> 00:03:24.500
that people in his county

00:03:24.500 --> 00:03:26.540
that had gotten increasingly urban

00:03:26.540 --> 00:03:29.490
and had gotten increasingly
dense over the course

00:03:29.490 --> 00:03:30.820
of those 60 years,

00:03:30.820 --> 00:03:32.670
that they were getting
the same representation

00:03:32.670 --> 00:03:34.900
despite having a larger
population than some

00:03:34.900 --> 00:03:38.100
of the rural areas where
they have a lower population

00:03:38.100 --> 00:03:41.140
and had the same number
of representatives,

00:03:41.140 --> 00:03:44.690
and so he takes this case
against the Secretary of State

00:03:44.690 --> 00:03:46.730
of Tennessee at the time, who was Carr,

00:03:46.730 --> 00:03:49.140
and it eventually gets
to the Supreme Court,

00:03:49.140 --> 00:03:52.950
and the essential question
in Baker versus Carr is

00:03:52.950 --> 00:03:55.970
whether the courts even have jurisdiction

00:03:55.970 --> 00:03:58.200
over legislative districting

00:03:58.200 --> 00:04:00.480
because the districting was a power

00:04:00.480 --> 00:04:03.920
of the state legislature in
Tennessee, and in this case,

00:04:03.920 --> 00:04:06.480
the United States Supreme
Court actually did vote

00:04:06.480 --> 00:04:08.700
in favor of Baker.

00:04:08.700 --> 00:04:11.930
So not only did they say that
Baker was right in asking

00:04:11.930 --> 00:04:13.230
for this redistricting,

00:04:13.230 --> 00:04:15.200
it had huge implications in saying that,

00:04:15.200 --> 00:04:18.170
yes, courts, like the
United States Supreme Court,

00:04:18.170 --> 00:04:20.700
do have jurisdiction over something

00:04:20.700 --> 00:04:23.120
that was officially a legislative duty,

00:04:23.120 --> 00:04:24.820
telling the legislative that,

00:04:24.820 --> 00:04:26.680
"Look, you've got to do this 'cause

00:04:26.680 --> 00:04:28.220
"by not doing this action,

00:04:28.220 --> 00:04:30.470
"by exercising your discretion there,

00:04:30.470 --> 00:04:33.160
"you might not be
allowing everyone to have

00:04:33.160 --> 00:04:34.250
"equal protection."

00:04:34.250 --> 00:04:36.290
Many have argued, including
the two dissenters

00:04:36.290 --> 00:04:39.270
to the opinion that this was
a form of judicial activism.

00:04:39.270 --> 00:04:43.050
It increased the power of the judiciary,

00:04:43.050 --> 00:04:44.380
and to appreciate the view

00:04:44.380 --> 00:04:45.610
of the United States Supreme Court

00:04:45.610 --> 00:04:47.420
that they do have jurisdiction

00:04:47.420 --> 00:04:50.530
over legislative districting, here is part

00:04:50.530 --> 00:04:54.530
of Associate Justice
Douglas's concurring opinion.

00:04:54.530 --> 00:04:57.670
"Where the performance of a
duty is left to the discretion

00:04:57.670 --> 00:05:00.400
"and good judgment of
an executive officer,

00:05:00.400 --> 00:05:03.350
"the judiciary will
not compel the exercise

00:05:03.350 --> 00:05:06.090
"of his discretion one way or the other...

00:05:06.090 --> 00:05:09.110
"for to do so would be to
take over the office...."

00:05:09.110 --> 00:05:11.820
So he's saying, look,
when it is someone's job

00:05:11.820 --> 00:05:14.270
where there's an executive
officer to do this duty,

00:05:14.270 --> 00:05:16.930
then the courts should not
have jurisdiction there,

00:05:16.930 --> 00:05:18.900
but then he goes on to write,

00:05:18.900 --> 00:05:23.010
"There is no doubt that the
federal courts have jurisdiction

00:05:23.010 --> 00:05:25.700
"of controversies
concerning voting rights.

00:05:25.700 --> 00:05:28.730
"The Civil Rights Act gives them authority

00:05:28.730 --> 00:05:33.180
"to redress the deprivation
under color of any state law

00:05:33.180 --> 00:05:36.260
"of any right, privilege
or immunity secured

00:05:36.260 --> 00:05:38.580
"by the Constitution of the United States

00:05:38.580 --> 00:05:40.720
"or by any Act of Congress providing

00:05:40.720 --> 00:05:42.590
"for equal rights of citizens...."

00:05:42.590 --> 00:05:44.940
Really saying that, look,
if the court can see

00:05:44.940 --> 00:05:46.730
that some right is being violated,

00:05:46.730 --> 00:05:50.120
some right is described in
any under the state law,

00:05:50.120 --> 00:05:52.150
under the United States Constitution,

00:05:52.150 --> 00:05:54.870
then the courts do have jurisdiction.

00:05:54.870 --> 00:05:56.850
"The right to vote in both federal

00:05:56.850 --> 00:05:58.800
"and state elections was protected

00:05:58.800 --> 00:06:02.010
"by the judiciary long
before that right received

00:06:02.010 --> 00:06:05.230
"the explicit protection
it is now accorded."

00:06:05.230 --> 00:06:08.160
So he's saying, look, even
before the Civil Rights Act,

00:06:08.160 --> 00:06:10.770
even before the 14th amendment,
that this was something

00:06:10.770 --> 00:06:13.270
that was part of the
charter of the judiciary,

00:06:13.270 --> 00:06:16.860
part of the federal court
system, and so it does lean

00:06:16.860 --> 00:06:19.070
in favor of judicial activism

00:06:19.070 --> 00:06:20.650
because you can imagine courts,

00:06:20.650 --> 00:06:23.150
and they have cited Baker versus Carr

00:06:23.150 --> 00:06:26.830
since the 1960s repeatedly
as reason, saying, hey look,

00:06:26.830 --> 00:06:29.230
we're trying to protect people's rights,

00:06:29.230 --> 00:06:31.900
and people have a right to do X, Y, or Z,

00:06:31.900 --> 00:06:35.450
even if it hasn't been
explicitly legislated.

00:06:35.450 --> 00:06:37.430
Now there were two dissenters,

00:06:37.430 --> 00:06:39.690
and this is what the dissenters wrote.

00:06:39.690 --> 00:06:43.130
"The courts authority--possessed
of neither of the purse

00:06:43.130 --> 00:06:44.300
"nor the sword..."

00:06:44.300 --> 00:06:46.920
So here, the purse, that's
the legislative branch

00:06:46.920 --> 00:06:48.410
that can think about budgets

00:06:48.410 --> 00:06:50.480
or the sword, that's the executive branch.

00:06:50.480 --> 00:06:52.460
The president's the commander in chief.

00:06:52.460 --> 00:06:56.000
"Ultimately rests on
sustained public confidence

00:06:56.000 --> 00:06:57.060
"in its moral sanction."

00:06:57.060 --> 00:06:57.893
Let me underline that.

00:06:57.893 --> 00:07:02.460
"On sustained public confidence
in its moral sanction.

00:07:02.460 --> 00:07:04.880
"Such feeling must be nourished

00:07:04.880 --> 00:07:07.880
"by the Court's complete detachment,

00:07:07.880 --> 00:07:10.170
"in fact and in appearance,

00:07:10.170 --> 00:07:14.120
"from political entanglement
and by abstention

00:07:14.120 --> 00:07:16.690
"from injecting itself into the clash

00:07:16.690 --> 00:07:20.110
"of political forces in
political settlements."

00:07:20.110 --> 00:07:23.060
So here, Associate Justice Frankfurter,

00:07:23.060 --> 00:07:24.990
in his dissenting opinion, is saying,

00:07:24.990 --> 00:07:27.440
look, we should stay out of this,

00:07:27.440 --> 00:07:31.840
that not only is it not our
part to rule here, to say that,

00:07:31.840 --> 00:07:33.610
hey look, the legislative needs to do

00:07:33.610 --> 00:07:35.230
this redistricting again.

00:07:35.230 --> 00:07:37.930
He's saying that it actually
undermines the credibility

00:07:37.930 --> 00:07:39.330
of the court, that the credibility

00:07:39.330 --> 00:07:42.490
"ultimately rests on
sustained public confidence

00:07:42.490 --> 00:07:43.790
"in its moral sanction,"

00:07:43.790 --> 00:07:46.370
and that by ruling in favor of Baker

00:07:46.370 --> 00:07:48.750
the court was overstepping
of these bounds,

00:07:48.750 --> 00:07:49.583
that people would say,

00:07:49.583 --> 00:07:51.660
hey, you're starting to
legislate from the bench.

00:07:51.660 --> 00:07:53.410
You're trying to get
involved in the political,

00:07:53.410 --> 00:07:55.200
even though the court is supposed to stay

00:07:55.200 --> 00:07:57.360
above the fray of the political,

00:07:57.360 --> 00:07:58.790
or another way to think about this is

00:07:58.790 --> 00:08:02.200
that Associate Justice
Frankfurter subscribed to the idea

00:08:02.200 --> 00:08:06.940
of judicial restraint and felt
that the other six justices

00:08:06.940 --> 00:08:09.930
that were voting in favor
of Baker were practicing

00:08:09.930 --> 00:08:12.350
to some degree judicial activism.

00:08:12.350 --> 00:08:14.800
They were getting into the territory

00:08:14.800 --> 00:08:17.040
of the other branches of government.


Automatic stabilizers

WEBVTT
Kind: captions
Language: en

00:00:00.350 --> 00:00:02.090
- [Instructor] So what we
have depicted in this diagram

00:00:02.090 --> 00:00:03.760
is the business cycle
that we have looked at

00:00:03.760 --> 00:00:04.650
in other videos.

00:00:04.650 --> 00:00:06.250
This horizontal axis is time.

00:00:06.250 --> 00:00:08.470
The vertical axis is real GDP.

00:00:08.470 --> 00:00:10.900
What we see in this dark blue color,

00:00:10.900 --> 00:00:15.220
you can view that as
full employment output

00:00:15.220 --> 00:00:16.470
at different points in time,

00:00:16.470 --> 00:00:17.970
and you can see that it is growing.

00:00:17.970 --> 00:00:20.570
So this economy is
experiencing economic growth.

00:00:20.570 --> 00:00:22.500
Maybe it's population is increasing,

00:00:22.500 --> 00:00:23.760
they're getting more productive,

00:00:23.760 --> 00:00:26.940
maybe with better education
or with better technology.

00:00:26.940 --> 00:00:28.790
But we know that real
economies don't just have

00:00:28.790 --> 00:00:31.100
this nice, clean economic growth.

00:00:31.100 --> 00:00:35.420
They tend to cycle around
their full employment output.

00:00:35.420 --> 00:00:37.680
There are times when they
are above the trend line.

00:00:37.680 --> 00:00:40.650
Like right over here, you
have a positive output gap.

00:00:40.650 --> 00:00:43.160
So this is a positive output gap

00:00:43.160 --> 00:00:44.610
at that point right over there.

00:00:44.610 --> 00:00:47.030
And you could also have
negative output gaps.

00:00:47.030 --> 00:00:51.349
We also talked in other
videos about fiscal policy.

00:00:51.349 --> 00:00:54.550
These are tools that governments might use

00:00:54.550 --> 00:00:57.090
in order to close these output gaps.

00:00:57.090 --> 00:01:01.470
For example, when you have
a positive output gap,

00:01:01.470 --> 00:01:04.140
a government might be afraid
that things are overheating.

00:01:04.140 --> 00:01:05.740
Maybe they're afraid of inflation.

00:01:05.740 --> 00:01:08.160
They might have
contractionary fiscal policy.

00:01:08.160 --> 00:01:11.080
They might try to do something
for that moment in time

00:01:11.080 --> 00:01:14.230
to bring to close that gap a little bit.

00:01:14.230 --> 00:01:17.210
More likely, when there's
a negative output gap

00:01:17.210 --> 00:01:19.180
and people are out of work,
the government will say,

00:01:19.180 --> 00:01:21.061
"Hey, let's pass a stimulus package,

00:01:21.061 --> 00:01:24.940
"explicitly to try to close
this gap. Let's lower taxes.

00:01:24.940 --> 00:01:26.770
"Let's increase government spending."

00:01:26.770 --> 00:01:28.990
That type of fiscal policy,

00:01:28.990 --> 00:01:31.110
where the government is
doing something special

00:01:31.110 --> 00:01:34.280
for that circumstance in order
to close that output gap,

00:01:34.280 --> 00:01:38.430
that is discretionary,
discretionary fiscal policy.

00:01:38.430 --> 00:01:40.980
It's at the discretion of
the government to do it.

00:01:40.980 --> 00:01:42.990
What we're going to focus on in this video

00:01:42.990 --> 00:01:44.772
are automatic stabilizers.

00:01:44.772 --> 00:01:47.900
These are things that people don't have to

00:01:47.900 --> 00:01:50.820
take special action based
on the circumstances

00:01:50.820 --> 00:01:55.200
in order for them to help
smooth out the business cycle.

00:01:55.200 --> 00:01:58.820
So automatic stabilizers.

00:01:58.820 --> 00:02:02.510
So what are examples of
automatic stabilizers?

00:02:02.510 --> 00:02:05.095
So one common one is taxes.

00:02:05.095 --> 00:02:07.970
So pause this video for
a second and think about

00:02:07.970 --> 00:02:12.282
how do taxes help smooth
out these fluctuations?

00:02:12.282 --> 00:02:14.313
So let's think about what's happening

00:02:14.313 --> 00:02:15.950
at a part of the business cycle

00:02:15.950 --> 00:02:18.540
where the economy's expanding,
let's say right over there,

00:02:18.540 --> 00:02:20.860
or let's say right over here.

00:02:20.860 --> 00:02:22.639
What would be happening with taxes?

00:02:22.639 --> 00:02:26.750
Well, in these realities,
with this positive output gap,

00:02:26.750 --> 00:02:29.290
you could imagine people's
incomes are going to get higher

00:02:29.290 --> 00:02:32.720
and higher, corporate profits
are going to be more and more,

00:02:32.720 --> 00:02:36.630
and so our change in taxes
is going to be positive,

00:02:36.630 --> 00:02:38.170
and not only is it going to be positive,

00:02:38.170 --> 00:02:40.050
not only are taxes going to increase

00:02:40.050 --> 00:02:41.390
in absolute dollar terms,

00:02:41.390 --> 00:02:43.560
but they're probably gonna
grow at a faster rate

00:02:43.560 --> 00:02:44.630
than the economy.

00:02:44.630 --> 00:02:45.650
Why is that?

00:02:45.650 --> 00:02:47.178
When the economy turns positive,

00:02:47.178 --> 00:02:48.880
when you start expanding more,

00:02:48.880 --> 00:02:50.917
more and more corporations are
going to become profitable.

00:02:50.917 --> 00:02:52.745
If you think about personal income taxes,

00:02:52.745 --> 00:02:54.900
below certain incomes
in a lot of countries,

00:02:54.900 --> 00:02:56.540
you don't even have to pay income taxes,

00:02:56.540 --> 00:02:58.830
and that for every incremental dollar

00:02:58.830 --> 00:03:00.953
or every incremental $10,000, the tax rate

00:03:00.953 --> 00:03:04.290
on that incremental chunk could go up.

00:03:04.290 --> 00:03:08.204
And so that's why the absolute
dollar amount of taxes

00:03:08.204 --> 00:03:11.170
will likely increase at a faster rate

00:03:11.170 --> 00:03:13.527
than the actual economic growth.

00:03:13.527 --> 00:03:15.240
And let's think about the other scenario.

00:03:15.240 --> 00:03:16.840
Let's think about what taxes do

00:03:16.840 --> 00:03:18.190
when we are in a recession.

00:03:18.190 --> 00:03:20.313
So let's say we pick that
place right over there.

00:03:20.313 --> 00:03:22.830
Well, in this situation, corporate profits

00:03:22.830 --> 00:03:23.760
are going to be lower.

00:03:23.760 --> 00:03:25.840
In fact, some corporations
are gonna become unprofitable,

00:03:25.840 --> 00:03:28.090
in which case they wouldn't
pay corporate taxes.

00:03:28.090 --> 00:03:29.970
People are gonna make less and less money.

00:03:29.970 --> 00:03:32.540
So your change in taxes
here is going to be

00:03:32.540 --> 00:03:33.910
likely to be negative.

00:03:33.910 --> 00:03:36.530
And once again, your
rate of decrease in taxes

00:03:36.530 --> 00:03:39.260
is likely to be greater
than your rate in decrease

00:03:39.260 --> 00:03:40.660
of real GDP.

00:03:40.660 --> 00:03:42.400
The tax multiplier is negative,

00:03:42.400 --> 00:03:46.116
and so it might smooth out
the curve a little bit.

00:03:46.116 --> 00:03:49.406
Now another example of
an automatic stabilizer

00:03:49.406 --> 00:03:54.406
would be things like welfare payments

00:03:55.070 --> 00:03:57.533
or unemployment insurance.

00:03:57.533 --> 00:04:01.470
Why would these be automatic stabilizers?

00:04:01.470 --> 00:04:03.490
Well, when times are good,

00:04:03.490 --> 00:04:05.840
when you have this positive output gap,

00:04:05.840 --> 00:04:08.689
fewer and fewer people
are going to need welfare

00:04:08.689 --> 00:04:12.070
or they're going to need
unemployment payments,

00:04:12.070 --> 00:04:15.090
and so in that world,
that is like a decrease

00:04:15.090 --> 00:04:16.200
in government spending.

00:04:16.200 --> 00:04:17.770
The government's not going to have to pay

00:04:17.770 --> 00:04:19.150
for these benefits.

00:04:19.150 --> 00:04:21.140
And so decrease in government spending,

00:04:21.140 --> 00:04:23.290
that's contractionary, and so that'll help

00:04:23.290 --> 00:04:24.890
smooth out the curve a little bit.

00:04:24.890 --> 00:04:28.191
And once again, when we
go into our recession

00:04:28.191 --> 00:04:32.140
and then when we start having
our negative output gaps,

00:04:32.140 --> 00:04:33.980
more people are going to be on welfare.

00:04:33.980 --> 00:04:36.730
More people are going to need
their unemployment benefits

00:04:36.730 --> 00:04:38.959
and so that's going to
increase government spending,

00:04:38.959 --> 00:04:41.443
which might, with the multiplier,

00:04:41.443 --> 00:04:44.040
smooth out this curve a little bit.

00:04:44.040 --> 00:04:46.380
And so the big takeaway is

00:04:46.380 --> 00:04:48.720
is when the government
does something explicitly

00:04:48.720 --> 00:04:50.470
for the time that they are in

00:04:50.470 --> 00:04:52.140
in order to smooth out the curve,

00:04:52.140 --> 00:04:54.122
that's discretionary fiscal policy.

00:04:54.122 --> 00:04:56.360
But you might have things in the system,

00:04:56.360 --> 00:05:00.250
the existing tax policy,
existing laws around welfare,

00:05:00.250 --> 00:05:02.429
or unemployment insurance,
or other benefits

00:05:02.429 --> 00:05:04.290
that might have an effect of,

00:05:04.290 --> 00:05:06.672
regardless of where we
are in the business cycle,

00:05:06.672 --> 00:05:09.052
they have a dampening effect.

00:05:09.052 --> 00:05:12.400
They would smooth out these
oscillations a little more.

00:05:12.400 --> 00:05:14.770
They would be automatic stabilizers.


Discretionary and rulemaking authority of the federal bureaucracy

WEBVTT
Kind: captions
Language: en

00:00:00.120 --> 00:00:02.090
- [Instructor] In many
videos, we have talked about

00:00:02.090 --> 00:00:04.860
how a bill can become a law.

00:00:04.860 --> 00:00:07.890
It first gets introduced
into the Legislative Branch,

00:00:07.890 --> 00:00:10.490
which in the United
States, is the US Congress

00:00:10.490 --> 00:00:13.300
at the federal level, and
if it passes both Houses

00:00:13.300 --> 00:00:16.840
of Congress, then the bill
will go to the president,

00:00:16.840 --> 00:00:18.955
and if the president signs the bill

00:00:18.955 --> 00:00:21.140
or if the president vetoes the bill

00:00:21.140 --> 00:00:24.160
but then it gets overruled
by Legislative, then,

00:00:24.160 --> 00:00:27.870
let's just assume that the
president signs, signs the bill,

00:00:27.870 --> 00:00:30.970
then that bill becomes a law.

00:00:30.970 --> 00:00:32.550
It becomes a law.

00:00:32.550 --> 00:00:37.000
But the question is is how is
this law actually implemented?

00:00:37.000 --> 00:00:40.450
And you might guess that that is the work

00:00:40.450 --> 00:00:44.340
of the bureaucracy, and
we've already talked about

00:00:44.340 --> 00:00:46.980
the bureaucracy in
multiple videos already.

00:00:46.980 --> 00:00:49.750
The bureaucracy is part
of the Executive Branch.

00:00:49.750 --> 00:00:52.770
It's actually the bulk
of federal employees.

00:00:52.770 --> 00:00:56.750
And as we'll see, as part of
this implementing process,

00:00:56.750 --> 00:01:00.650
the bureaucracy has
authority on rulemaking

00:01:00.650 --> 00:01:02.720
and it also has discretionary authority.

00:01:02.720 --> 00:01:04.020
Let me write that down.

00:01:04.020 --> 00:01:07.650
So the bureaucracy, bureaucracy,

00:01:09.210 --> 00:01:11.400
is going to implement the law,

00:01:11.400 --> 00:01:14.003
and they have different
types of authority to do so.

00:01:14.003 --> 00:01:15.848
They have rulemaking authority,

00:01:15.848 --> 00:01:19.010
where for specific
circumstances, they must say,

00:01:19.010 --> 00:01:20.390
"Hey. This is how it's going to work,"

00:01:20.390 --> 00:01:22.130
that the law itself does not specify it,

00:01:22.130 --> 00:01:24.270
but based on what that
law is trying to do,

00:01:24.270 --> 00:01:27.450
they are going to set some
rules, and as we'll see,

00:01:27.450 --> 00:01:29.470
the people working inside the bureaucracy,

00:01:29.470 --> 00:01:31.568
many of whom are experts
on whatever policy

00:01:31.568 --> 00:01:34.637
they are trying to implement
have some discretion

00:01:34.637 --> 00:01:38.110
on how they actually implement this law.

00:01:38.110 --> 00:01:40.020
So their authority, sometimes you'll hear

00:01:40.020 --> 00:01:43.690
rulemaking authority and
discretionary authority.

00:01:43.690 --> 00:01:45.220
And as an example of that,

00:01:45.220 --> 00:01:48.840
we can look at what is
often known as Title IX.

00:01:48.840 --> 00:01:51.025
So this right over here is Title IX

00:01:51.025 --> 00:01:53.630
of the Education Amendments of 1972.

00:01:53.630 --> 00:01:56.300
It passed through Congress
and then was signed into law

00:01:56.300 --> 00:01:58.550
by President Nixon, and it says,

00:01:58.550 --> 00:02:02.710
"No person in the United States
shall, on the basis of sex,

00:02:02.710 --> 00:02:05.400
"be excluded from participation in,

00:02:05.400 --> 00:02:07.400
"be denied the benefits of,

00:02:07.400 --> 00:02:09.700
"or be subjected to discrimination

00:02:09.700 --> 00:02:13.110
"under any education program or activity

00:02:13.110 --> 00:02:17.240
"receiving Federal financial assistance."

00:02:17.240 --> 00:02:18.990
So this gets through the legislature,

00:02:18.990 --> 00:02:21.100
President Nixon signs it, becomes a law,

00:02:21.100 --> 00:02:23.910
but then how does this thing
actually get implemented?

00:02:23.910 --> 00:02:26.010
And so this, as we've
already talked about,

00:02:26.010 --> 00:02:28.030
is the job of the bureaucracy.

00:02:28.030 --> 00:02:29.954
And it's not just one department.

00:02:29.954 --> 00:02:32.410
Many departments of the federal government

00:02:32.410 --> 00:02:33.470
are going to have to think about

00:02:33.470 --> 00:02:37.296
how do they implement this
statute right over here?

00:02:37.296 --> 00:02:40.920
And as an example of how, say
the Department of Education

00:02:40.920 --> 00:02:43.230
thought about it, I'll give
you a little bit of an excerpt

00:02:43.230 --> 00:02:45.830
from their rules and regulations.

00:02:45.830 --> 00:02:48.370
So this right over here
is part of the rules

00:02:48.370 --> 00:02:50.660
and regulations from the
Department of Education

00:02:50.660 --> 00:02:54.100
in their attempt to implement Title IX.

00:02:54.100 --> 00:02:56.760
And as I really think
about what part of this

00:02:56.760 --> 00:03:00.330
really shows the bureaucracy's
rulemaking authority

00:03:00.330 --> 00:03:03.300
and what part shows its
discretionary authority?

00:03:03.300 --> 00:03:06.840
"Every application for
Federal financial assistance

00:03:06.840 --> 00:03:11.160
"shall as condition of
its approval contain

00:03:11.160 --> 00:03:15.480
"or be accompanied by an
assurance from the applicant

00:03:15.480 --> 00:03:19.970
"or recipient, satisfactory
to the Assistant Secretary,

00:03:19.970 --> 00:03:22.230
"that the education program or activity

00:03:22.230 --> 00:03:24.600
"operated by the applicant or recipient

00:03:24.600 --> 00:03:27.800
"and to which this part
applies will be operated

00:03:27.800 --> 00:03:30.660
"in compliance with this part."

00:03:30.660 --> 00:03:32.310
So that is a mouthful.

00:03:32.310 --> 00:03:34.110
I will help you parse it a little bit.

00:03:34.110 --> 00:03:37.770
So in this document, the
term applicant and recipient,

00:03:37.770 --> 00:03:40.570
these are the institutions that are either

00:03:40.570 --> 00:03:43.020
applying for federal assistance

00:03:43.020 --> 00:03:45.600
or have already received
financial assistance

00:03:45.600 --> 00:03:47.360
and it's saying every application

00:03:47.360 --> 00:03:48.800
for Federal financial assistance

00:03:48.800 --> 00:03:51.193
shall as condition for
its approval contain

00:03:51.193 --> 00:03:54.490
or be accompanied by an
assurance from the applicant

00:03:54.490 --> 00:03:55.460
or recipient.

00:03:55.460 --> 00:03:56.600
So the big picture.

00:03:56.600 --> 00:04:00.810
This whole thing is a
rule that is being set up

00:04:00.810 --> 00:04:02.700
by the Office of Civil Rights

00:04:02.700 --> 00:04:05.010
within the Department of Education.

00:04:05.010 --> 00:04:07.540
So it clearly shows rulemaking authority.

00:04:07.540 --> 00:04:10.913
And this is just one part of
a much, much larger document

00:04:10.913 --> 00:04:14.520
full of rules on how just
the Department of Education

00:04:14.520 --> 00:04:16.060
is thinking about Title IX.

00:04:16.060 --> 00:04:18.770
And these things have the rule of law,

00:04:18.770 --> 00:04:21.860
even though every detail
here has not been passed

00:04:21.860 --> 00:04:23.150
through Congress.

00:04:23.150 --> 00:04:26.510
Of course, Congress will have
forms of oversight over this

00:04:26.510 --> 00:04:29.210
and the Supreme Court can
also deem certain rules

00:04:29.210 --> 00:04:30.980
or regulations to be unconstitutional

00:04:30.980 --> 00:04:32.811
if it thinks they are unconstitutional.

00:04:32.811 --> 00:04:35.480
Now another thing in this
clause right over here

00:04:35.480 --> 00:04:37.330
that I just read, you might have noticed,

00:04:37.330 --> 00:04:41.064
"satisfactory to the Assistant Secretary."

00:04:41.064 --> 00:04:44.152
So it's the Assistant
Secretary's discretion

00:04:44.152 --> 00:04:47.860
as to whether an institution
has met the requirements.

00:04:47.860 --> 00:04:50.613
So once again, this shows
the discretionary authority

00:04:50.613 --> 00:04:52.700
of the bureaucracy.

00:04:52.700 --> 00:04:55.977
So the big takeaway here is
it is the Legislative Branch

00:04:55.977 --> 00:04:58.820
that is responsible for passing laws,

00:04:58.820 --> 00:05:01.330
and then you have the president
that would sign something

00:05:01.330 --> 00:05:03.290
into law, but once it's a law,

00:05:03.290 --> 00:05:05.230
but there's a lot of
details to be worked out

00:05:05.230 --> 00:05:06.790
in terms of how it's implemented,

00:05:06.790 --> 00:05:09.170
and that is the job of the bureaucracy.

00:05:09.170 --> 00:05:12.990
And in order to do that, they
make rules and regulations,

00:05:12.990 --> 00:05:16.810
and those rules and regulations
also have the force of law.

00:05:16.810 --> 00:05:19.740
And top of that, there's
going to be opportunities

00:05:19.740 --> 00:05:22.170
for them to exercise their discretion.


Another average velocity and speed example

WEBVTT
Kind: captions
Language: en

00:00:00.510 --> 00:00:02.580
- [Instructor] We are
told a seal and a penguin

00:00:02.580 --> 00:00:04.760
are playing a fun game of catch.

00:00:04.760 --> 00:00:07.860
The penguin swims leftward nine meters

00:00:07.860 --> 00:00:10.790
then dodges rightwards another 12 meters.

00:00:10.790 --> 00:00:14.320
The penguin swims a total
time of eight seconds.

00:00:14.320 --> 00:00:16.090
So goes to the left for nine meters

00:00:16.090 --> 00:00:18.960
and then it goes to the
right for 12 meters.

00:00:18.960 --> 00:00:21.950
What is the penguin's average
velocity during the chase?

00:00:21.950 --> 00:00:23.890
And they say answer
using a coordinate system

00:00:23.890 --> 00:00:27.010
where rightward is
positive and round answer

00:00:27.010 --> 00:00:28.970
to two significant digits,

00:00:28.970 --> 00:00:30.630
or really we should be
rounding our answers

00:00:30.630 --> 00:00:32.720
to two significant digits.

00:00:32.720 --> 00:00:34.230
So pause this video and
see if you can figure out

00:00:34.230 --> 00:00:37.250
the penguin's average
velocity during the chase.

00:00:38.190 --> 00:00:39.780
All right so let's just think about it.

00:00:39.780 --> 00:00:42.620
Our average velocity right over here,

00:00:42.620 --> 00:00:44.630
it is a vector quantity,
sometimes you will see it

00:00:44.630 --> 00:00:45.600
written like that,

00:00:45.600 --> 00:00:47.330
but sometimes when we're
thinking about one-dimensional

00:00:47.330 --> 00:00:49.360
vectors people don't bother with it.

00:00:49.360 --> 00:00:52.160
And our whether we talk about
a positive or negative sign,

00:00:52.160 --> 00:00:53.910
that tells us our direction.

00:00:53.910 --> 00:00:56.130
But this is going to be
equal to our displacement

00:00:56.130 --> 00:00:58.310
divided by the elapsed time,

00:00:58.310 --> 00:01:01.270
displacement divided

00:01:01.270 --> 00:01:03.630
by our time.

00:01:03.630 --> 00:01:06.460
And so what is our displacement?

00:01:06.460 --> 00:01:08.540
Well we go nine to the left,

00:01:08.540 --> 00:01:10.640
and remember our convention
is that the left is negative,

00:01:10.640 --> 00:01:13.070
so it's gonna be negative nine meters,

00:01:13.070 --> 00:01:16.610
plus 12 meters to the right,
12 meters to the right,

00:01:16.610 --> 00:01:20.190
all of that our elapsed
time of eight seconds.

00:01:20.190 --> 00:01:22.180
And what's this going to be equal to?

00:01:22.180 --> 00:01:26.100
Well negative nine plus 12
is a net of positive three

00:01:26.100 --> 00:01:29.570
over eight, and our units of
course are meters per second.

00:01:29.570 --> 00:01:31.460
So 3/8 of a meter per second.

00:01:31.460 --> 00:01:33.890
But they want us to go to
two significant digits,

00:01:33.890 --> 00:01:35.791
so I'll write it as a decimal.

00:01:35.791 --> 00:01:40.791
3/8 is the same thing as 0.375,

00:01:40.880 --> 00:01:43.520
but since they want us to round
to two significant digits,

00:01:43.520 --> 00:01:48.510
I'll just say 0.38 meters per second.

00:01:48.510 --> 00:01:51.130
That is the penguin's average velocity

00:01:51.130 --> 00:01:52.240
during the chase.

00:01:52.240 --> 00:01:54.230
It would be approximately
this right over here

00:01:54.230 --> 00:01:57.000
if we round to two significant digits.

00:01:57.000 --> 00:01:58.800
But now let's think
about this next question.

00:01:58.800 --> 00:02:02.710
What is the penguin's average
speed during the chase?

00:02:02.710 --> 00:02:05.730
Pause this video again and see
if you can work through that.

00:02:06.750 --> 00:02:08.290
All right now let's do it together.

00:02:08.290 --> 00:02:10.840
So our average speed,

00:02:10.840 --> 00:02:13.020
and we'll use r for rate sometimes,

00:02:13.020 --> 00:02:15.340
which could be used for speed,

00:02:15.340 --> 00:02:16.570
our average speed.

00:02:16.570 --> 00:02:19.010
Instead of displacement
divided by elapsed time,

00:02:19.010 --> 00:02:20.652
we're gonna be thinking about distance

00:02:20.652 --> 00:02:24.650
divided by elapsed time.

00:02:24.650 --> 00:02:27.200
And with distance we don't
care about the direction,

00:02:27.200 --> 00:02:28.950
we just care about the magnitude.

00:02:28.950 --> 00:02:30.550
So we go nine meters to the left

00:02:31.640 --> 00:02:33.800
plus 12 meters to the right.

00:02:33.800 --> 00:02:35.970
One way to think about
it is the absolute value

00:02:35.970 --> 00:02:38.290
of each of these values up here.

00:02:38.290 --> 00:02:41.050
And then we're gonna divide
that by our elapsed time.

00:02:41.050 --> 00:02:45.720
And so this is going to
be equal to 21 over eight

00:02:45.720 --> 00:02:47.210
meters per second.

00:02:47.210 --> 00:02:49.970
And let's see 21 over eight

00:02:49.970 --> 00:02:52.440
is equal to eight goes into 21 two times,

00:02:52.440 --> 00:02:54.840
you have five left over, 2 5/8.

00:02:54.840 --> 00:02:58.240
5/8 as a decimal is .625.

00:02:58.240 --> 00:03:00.260
So this is gonna be equal to 2.625.

00:03:01.760 --> 00:03:04.830
If they want us to round
to two significant digits,

00:03:04.830 --> 00:03:05.730
it's gonna be 2.6.

00:03:06.906 --> 00:03:10.820
So it's gonna be approximately
2.6 meters per second,

00:03:10.820 --> 00:03:11.653
and we're done.


Average velocity and speed worked example

WEBVTT
Kind: captions
Language: en

00:00:00.320 --> 00:00:02.490
- [Instructor] We are told a pig runs

00:00:02.490 --> 00:00:07.210
rightward 20 meters to eat a juicy apple.

00:00:07.210 --> 00:00:11.040
It then walks leftward five meters

00:00:11.040 --> 00:00:12.270
to eat a nut.

00:00:13.170 --> 00:00:15.070
Finally it walks leftward

00:00:15.070 --> 00:00:17.950
another 25 meters

00:00:17.950 --> 00:00:19.990
to eat another nut.

00:00:19.990 --> 00:00:22.030
The total time taken by the pig

00:00:22.030 --> 00:00:24.300
was 300 seconds.

00:00:24.300 --> 00:00:26.480
What was the pig's average velocity

00:00:26.480 --> 00:00:29.070
and average speed over this time?

00:00:29.070 --> 00:00:31.190
And assume rightwards is positive

00:00:31.190 --> 00:00:32.280
and leftwards is negative

00:00:32.280 --> 00:00:34.580
and round your answer to
two significant digits.

00:00:34.580 --> 00:00:36.500
So, pause this video
and try to work it out

00:00:36.500 --> 00:00:37.620
on your own.

00:00:38.630 --> 00:00:40.160
All right, now let's do this together

00:00:40.160 --> 00:00:41.520
and first let's just draw a diagram

00:00:41.520 --> 00:00:43.180
of what is going on.

00:00:43.180 --> 00:00:45.400
So, this is our pig.

00:00:45.400 --> 00:00:47.500
It first runs rightward 20 meters,

00:00:47.500 --> 00:00:50.800
so we could say that's a
positive 20-meter displacement,

00:00:50.800 --> 00:00:54.750
so it goes plus 20 meters,

00:00:54.750 --> 00:00:56.290
ends up right over there.

00:00:56.290 --> 00:00:59.020
Then it walks leftwards five meters,

00:00:59.020 --> 00:01:00.270
so then from there

00:01:00.270 --> 00:01:02.750
it's gonna walk leftwards five meters,

00:01:02.750 --> 00:01:06.130
so we could call that a
negative five-meter displacement

00:01:06.130 --> 00:01:10.460
and then finally, it walks
leftward another 25 meters.

00:01:10.460 --> 00:01:14.380
So, then it walks leftward
another 25 meters,

00:01:14.380 --> 00:01:15.213
so it gets right over there,

00:01:15.213 --> 00:01:16.490
so that would be a displacement

00:01:16.490 --> 00:01:19.869
of negative 25 meters to eat another nut,

00:01:19.869 --> 00:01:23.850
so it ends up right over there.

00:01:23.850 --> 00:01:27.920
Now, to figure out our average velocity,

00:01:27.920 --> 00:01:29.180
let me write it down,

00:01:29.180 --> 00:01:32.060
so our velocity average

00:01:32.060 --> 00:01:33.970
and even this is one dimensional,

00:01:33.970 --> 00:01:36.070
it is a vector, it has direction to it.

00:01:36.070 --> 00:01:38.280
We specify the direction with the sign

00:01:38.280 --> 00:01:40.600
positive being rightwards being positive

00:01:40.600 --> 00:01:42.240
and leftwards being negative.

00:01:42.240 --> 00:01:44.180
You oftentimes for one-dimensional vectors

00:01:44.180 --> 00:01:45.500
might not see an arrow there

00:01:45.500 --> 00:01:46.490
or might not see it bolded

00:01:46.490 --> 00:01:48.060
and just written like this.

00:01:48.060 --> 00:01:51.050
But our average velocity
is going to be equal

00:01:51.050 --> 00:01:54.470
to, you could view it as our displacement

00:01:54.470 --> 00:01:56.340
or our change in X

00:01:56.340 --> 00:01:58.370
divided by how much time

00:01:58.370 --> 00:01:59.870
has actually lapsed

00:01:59.870 --> 00:02:02.450
and so, what is our
displacement going to be?

00:02:02.450 --> 00:02:03.544
What's it?

00:02:03.544 --> 00:02:05.280
We have plus 20 meters

00:02:05.280 --> 00:02:08.182
and then we have minus five meters

00:02:08.182 --> 00:02:11.620
and then we go to the
left another 25 meters,

00:02:11.620 --> 00:02:13.710
minus 25 meters

00:02:13.710 --> 00:02:16.900
and then all of that is going
to over the elapsed change

00:02:16.900 --> 00:02:17.800
or change in time,

00:02:17.800 --> 00:02:21.340
all of that is over 300 seconds.

00:02:21.340 --> 00:02:22.790
So, what is this numerator going to be?

00:02:22.790 --> 00:02:25.390
This is 20 minus 30,

00:02:25.390 --> 00:02:28.240
so that's gonna be equal to negative 10,

00:02:28.240 --> 00:02:31.442
so this is equal to negative 10 meters

00:02:31.442 --> 00:02:36.050
over 300 seconds.

00:02:36.050 --> 00:02:38.050
So, the average velocity

00:02:38.050 --> 00:02:43.050
is going to be equal to
negative 1/30 meters per second,

00:02:45.630 --> 00:02:47.770
the negative specifies that on average

00:02:47.770 --> 00:02:50.630
the velocity is towards the left.

00:02:50.630 --> 00:02:52.500
If you wanna specify this as a decimal

00:02:52.500 --> 00:02:55.010
with two significant digits,

00:02:55.010 --> 00:02:56.130
this is going to be,

00:02:56.130 --> 00:03:01.130
so this will approximately equal to 0.033.

00:03:01.200 --> 00:03:03.430
That would be 1/30.

00:03:03.430 --> 00:03:05.807
Now let's try to tackle average speed.

00:03:05.807 --> 00:03:08.880
So, our speed,

00:03:08.880 --> 00:03:11.580
R sometimes is used for speed, R for rate,

00:03:11.580 --> 00:03:13.610
our average speed

00:03:13.610 --> 00:03:16.100
is not going to be our displacement

00:03:16.100 --> 00:03:17.800
divided by our lapsed time,

00:03:17.800 --> 00:03:19.620
it is going to be our distance

00:03:19.620 --> 00:03:21.630
divided by our elapsed time

00:03:21.630 --> 00:03:23.710
and we'll see that these are
not going to be the same thing.

00:03:23.710 --> 00:03:26.210
That's one of the points of this problem,

00:03:26.210 --> 00:03:28.570
so our distance divided
by our lapsed time.

00:03:28.570 --> 00:03:30.070
So, what's our distance traveled?

00:03:30.070 --> 00:03:31.380
Well, it's gonna be the absolute value

00:03:31.380 --> 00:03:32.420
of each of these numbers,

00:03:32.420 --> 00:03:34.150
so it's gonna be 20 meters

00:03:34.150 --> 00:03:38.090
plus five meters plus 25 meters.

00:03:38.090 --> 00:03:39.590
Notice, there's a difference here.

00:03:39.590 --> 00:03:41.280
We're not subtracting the five and the 25,

00:03:41.280 --> 00:03:42.820
we're just adding all of that.

00:03:42.820 --> 00:03:44.224
We just care about the magnitudes.

00:03:44.224 --> 00:03:47.260
Divided by 300 seconds

00:03:47.260 --> 00:03:51.940
and so, this is going to
be equal to 50 meters,

00:03:51.940 --> 00:03:54.160
over 300 seconds

00:03:54.160 --> 00:03:58.200
which is equal to five over 30

00:03:58.200 --> 00:04:02.050
which is equal to 1/6
of a meter per second

00:04:02.050 --> 00:04:04.510
and if we want to write it as a decimal,

00:04:04.510 --> 00:04:07.450
let's see, six goes into one,

00:04:07.450 --> 00:04:09.340
let's put some zeros here,

00:04:09.340 --> 00:04:11.680
six goes into 10 one time,

00:04:11.680 --> 00:04:13.260
one times six is six,

00:04:13.260 --> 00:04:15.430
I can scroll down a little bit

00:04:15.430 --> 00:04:18.260
and then we subtract, we get a four,

00:04:18.260 --> 00:04:21.460
six goes into 40 six times,

00:04:21.460 --> 00:04:23.140
six times six is 36

00:04:23.140 --> 00:04:25.120
and then we get,

00:04:25.120 --> 00:04:26.850
let me just scroll down
a little bit more again

00:04:27.858 --> 00:04:31.540
and then we get another four

00:04:31.540 --> 00:04:34.810
and then we're just gonna
keep getting sixes over here,

00:04:34.810 --> 00:04:39.600
so this is gonna be
approximately equal to 0.1,

00:04:39.600 --> 00:04:41.380
if we want two significant digits,

00:04:41.380 --> 00:04:45.520
17 meters per second

00:04:45.520 --> 00:04:47.450
and we are done.

00:04:47.450 --> 00:04:49.410
We figured out the average velocity

00:04:49.410 --> 00:04:50.980
and the average speed.


Money creation in a fractional reserve system

WEBVTT
Kind: captions
Language: en

00:00:00.570 --> 00:00:02.400
- [Instructor] Let's say, for some reason,

00:00:02.400 --> 00:00:05.510
you had lent the government $1,000,

00:00:05.510 --> 00:00:07.240
and so the government has given you

00:00:07.240 --> 00:00:09.370
a formally issued piece
of paper that says,

00:00:09.370 --> 00:00:13.440
"Hey, we, the government, owe you $1,000."

00:00:13.440 --> 00:00:15.000
This is issued by the Treasury.

00:00:15.000 --> 00:00:15.992
This could be a Treasury bond.

00:00:15.992 --> 00:00:18.920
It could be a T-Bill of some kind.

00:00:18.920 --> 00:00:20.870
And let's say that the Federal Reserve,

00:00:20.870 --> 00:00:23.640
the central bank is interested

00:00:23.640 --> 00:00:26.460
in inserting money into our system.

00:00:26.460 --> 00:00:29.300
So let's say this is the
Federal Reserve right over here.

00:00:29.300 --> 00:00:32.140
Federal Reserve.

00:00:32.140 --> 00:00:34.720
And so what they do is they create

00:00:34.720 --> 00:00:38.040
$1,000 of Federal Reserve Notes,

00:00:38.040 --> 00:00:40.090
what we associate as paper money,

00:00:40.090 --> 00:00:43.150
and they pay it to you
and they buy the Treasury,

00:00:43.150 --> 00:00:45.880
so the Treasury goes to the
Federal Reserve from you.

00:00:45.880 --> 00:00:50.490
And so, in an exchange, you
get this newly created money

00:00:50.490 --> 00:00:53.210
that the Federal Reserve just created.

00:00:53.210 --> 00:00:54.620
So, there you go.

00:00:54.620 --> 00:00:58.460
You have, this is $1,000.

00:00:58.460 --> 00:01:02.300
Now, what would you likely
do with that $1,000?

00:01:02.300 --> 00:01:04.270
Well, it might not be
safe to walk around town

00:01:04.270 --> 00:01:06.030
with your pockets bulging like that,

00:01:06.030 --> 00:01:08.890
so a lot of folks would
deposit it into a bank.

00:01:08.890 --> 00:01:10.320
So let's think about what would happen

00:01:10.320 --> 00:01:12.340
to the bank's balance sheet.

00:01:12.340 --> 00:01:16.170
So, you go to the Bank A

00:01:16.170 --> 00:01:19.890
and I'm just gonna think about
what was the balance sheet,

00:01:19.890 --> 00:01:21.570
the pre-existing balance
sheet for the bank,

00:01:21.570 --> 00:01:23.880
but let's just think about
what happens to its assets

00:01:23.880 --> 00:01:26.360
and its liabilities when
you make the deposit.

00:01:26.360 --> 00:01:28.870
A for assets, L for liabilities.

00:01:28.870 --> 00:01:32.810
If you deposit those thousand dollars,

00:01:32.810 --> 00:01:35.320
then your assets for the bank

00:01:35.320 --> 00:01:38.840
is going to get $1,000 in reserves,

00:01:40.950 --> 00:01:43.240
but you didn't just give them the money.

00:01:43.240 --> 00:01:44.870
They have a liability to you.

00:01:44.870 --> 00:01:47.610
You should have a checkable
deposit account now,

00:01:47.610 --> 00:01:50.020
so we could say checking account.

00:01:50.020 --> 00:01:53.810
So now, you have a $1,000 checking account

00:01:53.810 --> 00:01:56.240
which you would use an asset for yourself

00:01:56.240 --> 00:01:57.450
but it's a liability for the bank.

00:01:57.450 --> 00:01:58.400
At any time, you could come

00:01:58.400 --> 00:02:00.190
and ask for that thousand dollars.

00:02:00.190 --> 00:02:02.620
$1,000 checking account

00:02:05.700 --> 00:02:08.060
and this would be for you.

00:02:08.060 --> 00:02:09.790
Now, we've already spent several videos

00:02:09.790 --> 00:02:12.090
talking about fractional-reserve lending

00:02:12.090 --> 00:02:14.480
and there's two ways
we can conceptualize it

00:02:14.480 --> 00:02:16.000
as we've seen in those videos

00:02:16.000 --> 00:02:18.090
but I'm gonna go with the simpler version

00:02:18.090 --> 00:02:19.450
of fractional-reserve lending.

00:02:19.450 --> 00:02:22.250
And so this bank says,
"Look, we are in a world

00:02:22.250 --> 00:02:24.440
"where our reserve requirement,"

00:02:24.440 --> 00:02:25.942
I will do a reserve requirement.

00:02:25.942 --> 00:02:28.440
This actually is a typical
reserve requirement.

00:02:28.440 --> 00:02:29.890
The reserve requirement

00:02:30.940 --> 00:02:35.050
in this country is 10%,

00:02:35.050 --> 00:02:36.760
which says that the bank

00:02:36.760 --> 00:02:40.020
only has to keep 10%
of these cash reserves

00:02:40.020 --> 00:02:43.090
and then it could loan out
the rest, and so it does that.

00:02:43.090 --> 00:02:44.010
That's its business model

00:02:44.010 --> 00:02:45.800
or a significant part
of its business model.

00:02:45.800 --> 00:02:46.740
And so, what it does

00:02:46.740 --> 00:02:49.660
is instead of having $1,000 in reserves,

00:02:49.660 --> 00:02:53.440
it keeps 10%, so it keeps $100,

00:02:53.440 --> 00:02:55.800
and it loans out the rest.

00:02:55.800 --> 00:02:59.830
And so, it loans out $900.

00:02:59.830 --> 00:03:03.740
So, it's loaning out now
$900 to someone else,

00:03:03.740 --> 00:03:06.290
hopefully someone who
is good for the money,

00:03:06.290 --> 00:03:07.925
who maybe they're gonna
invest it into their business

00:03:07.925 --> 00:03:10.990
or they're going to buy a
house, or whatever else.

00:03:10.990 --> 00:03:15.070
Now once again, the bank just
didn't give them the money.

00:03:15.070 --> 00:03:16.720
In exchange, they get an asset,

00:03:16.720 --> 00:03:19.300
which is an IOU from that person.

00:03:19.300 --> 00:03:21.570
That person owes the bank money.

00:03:21.570 --> 00:03:23.520
They owe them $900.

00:03:23.520 --> 00:03:27.540
So, we could say that in exchange
for giving 'em that cash,

00:03:27.540 --> 00:03:31.808
they're going to have a $900 loan

00:03:31.808 --> 00:03:34.070
on their balance sheet as an asset.

00:03:34.070 --> 00:03:36.510
Now once again, the person
that they lent the money to,

00:03:36.510 --> 00:03:38.980
the loan would be a
liability, they owe the money,

00:03:38.980 --> 00:03:40.300
but for the bank, that's an asset.

00:03:40.300 --> 00:03:44.350
"Hey, someone owes me, the bank, $900."

00:03:44.350 --> 00:03:46.120
But then what's this person going to do?

00:03:46.120 --> 00:03:46.953
Well once again,

00:03:46.953 --> 00:03:48.770
their pocket's are gonna
bulge quite as much

00:03:48.770 --> 00:03:50.450
but they still might not
wanna walk around town

00:03:50.450 --> 00:03:52.500
with $900 in their pocket,

00:03:52.500 --> 00:03:55.530
so they are likely to deposit in a bank

00:03:55.530 --> 00:03:57.510
and they could deposit it in Bank A

00:03:57.510 --> 00:03:59.720
or they could deposit it in another bank.

00:03:59.720 --> 00:04:04.070
Let's call it very creatively,
Bank B, all right (chuckles).

00:04:04.070 --> 00:04:06.210
So, Bank B, same exercise.

00:04:06.210 --> 00:04:07.910
I think you might see where this is going,

00:04:07.910 --> 00:04:11.610
so its assets, its liabilities.

00:04:11.610 --> 00:04:14.210
And so they go and they deposit this $900,

00:04:15.960 --> 00:04:18.950
so you have $900 right over there.

00:04:18.950 --> 00:04:21.230
And the corresponding liability,

00:04:21.230 --> 00:04:23.430
that person then give
the money to the bank,

00:04:24.780 --> 00:04:26.450
that person can demand that money

00:04:26.450 --> 00:04:27.860
at any point from the bank,

00:04:27.860 --> 00:04:32.860
and so you have a $900 checking account,

00:04:33.610 --> 00:04:36.600
checking account.

00:04:36.600 --> 00:04:38.730
And that person would drop
on that checking account

00:04:38.730 --> 00:04:41.760
to buy the machinery for their
business or whatever else.

00:04:41.760 --> 00:04:43.990
But once again, we have a
10% reserve requirement,

00:04:43.990 --> 00:04:46.960
which says that the bank
only has to keep 10% of that,

00:04:46.960 --> 00:04:51.160
and so their business model
is they do only keep 10% of it

00:04:51.160 --> 00:04:53.500
and then the rest of it, they loan out.

00:04:53.500 --> 00:04:57.430
So, they loan out $810.

00:04:57.430 --> 00:05:00.610
It could be a loan or it could
be multiple loans altogether.

00:05:00.610 --> 00:05:03.730
And I think you see where this is going.

00:05:03.730 --> 00:05:06.940
So, this is lent out to someone else,

00:05:06.940 --> 00:05:10.150
so now we have $810,

00:05:10.150 --> 00:05:13.710
which can then be deposited
in another bank, Bank C.

00:05:13.710 --> 00:05:15.180
They can lend out 90% of that

00:05:15.180 --> 00:05:18.570
and that process keeps going
on and on and on and on.

00:05:18.570 --> 00:05:20.100
So, an interesting question

00:05:20.100 --> 00:05:23.630
is given this infusion
of a thousand dollars

00:05:23.630 --> 00:05:25.860
and given this reserve requirement,

00:05:25.860 --> 00:05:28.870
how much total money has been created?

00:05:28.870 --> 00:05:29.710
Well, in one other videos,

00:05:29.710 --> 00:05:32.760
we talk about the multiple
measures of the money supply.

00:05:32.760 --> 00:05:36.200
When the Federal Reserve put this $1,000,

00:05:36.200 --> 00:05:38.600
a Federal Reserve Notes into circulation,

00:05:38.600 --> 00:05:43.140
they increased the
monetary base by $1,000,

00:05:43.140 --> 00:05:45.410
but one measure of the monetary supply

00:05:45.410 --> 00:05:49.030
is, well, what are the Federal
Reserve Notes, the coins,

00:05:49.933 --> 00:05:52.630
and the paper money that's in circulation,

00:05:52.630 --> 00:05:55.740
plus the amount of checkable deposits,

00:05:55.740 --> 00:05:59.110
and we talk about that
in other videos as M1.

00:05:59.110 --> 00:06:02.920
And so, our M1 over
here, what's it gonna be?

00:06:02.920 --> 00:06:06.220
Well, this person has a thousand
dollar checking account,

00:06:06.220 --> 00:06:09.080
$1,000 checking out, they
think they have $1,000

00:06:09.080 --> 00:06:10.770
that they can write checks
against and they do.

00:06:10.770 --> 00:06:13.740
And this person has a
$900 checking account,

00:06:14.840 --> 00:06:16.110
$900 checking out.

00:06:16.110 --> 00:06:17.720
And then this person right over here

00:06:17.720 --> 00:06:18.920
that when they deposit their money,

00:06:18.920 --> 00:06:23.040
they're gonna think they have
an $810 checking account.

00:06:23.040 --> 00:06:23.873
They have that.

00:06:23.873 --> 00:06:25.900
And then that process, they're gonna go on

00:06:25.900 --> 00:06:27.410
and on and on and on.

00:06:27.410 --> 00:06:30.080
Someone else, when this
$810 gets deposited,

00:06:30.080 --> 00:06:32.800
the bank's gonna lend out 90% of that.

00:06:32.800 --> 00:06:35.040
That person's gonna think they
have that amount of money.

00:06:35.040 --> 00:06:35.930
And so what we do

00:06:35.930 --> 00:06:38.290
is we're just multiplying
by .9 every time.

00:06:38.290 --> 00:06:39.470
We're multiplying by one

00:06:39.470 --> 00:06:43.140
minus the reserve requirement every time.

00:06:43.140 --> 00:06:46.360
And we've done the mathematics
on this multiple times.

00:06:46.360 --> 00:06:49.470
This is going to be equal to $1,000,

00:06:50.320 --> 00:06:53.821
the initial amount that was
put into the monetary base,

00:06:53.821 --> 00:06:56.610
times one over

00:06:56.610 --> 00:07:00.120
one minus 0.9

00:07:00.120 --> 00:07:05.090
and that is just going to
be equal to $1,000 times

00:07:05.090 --> 00:07:07.250
one over 0.1

00:07:08.180 --> 00:07:09.013
or you could just view this

00:07:09.013 --> 00:07:13.220
as one over the reserve requirement.

00:07:13.220 --> 00:07:16.100
It just happened to be
0.1 in this example.

00:07:16.100 --> 00:07:18.500
Reserve requirement.

00:07:18.500 --> 00:07:20.810
And you could do the math
on what that's going to be.

00:07:20.810 --> 00:07:23.090
One divided by 1/10 is going to be 10,

00:07:23.090 --> 00:07:26.380
and so our M1 money supply

00:07:26.380 --> 00:07:28.990
that has been created in
this very simple example

00:07:28.990 --> 00:07:31.170
is going to be equal to

00:07:32.142 --> 00:07:34.270
10 times the thousand dollars,

00:07:34.270 --> 00:07:35.970
so it's gonna be equal to $10,000.

00:07:37.960 --> 00:07:39.160
So, big picture.

00:07:39.160 --> 00:07:42.610
When the monetary base is
increased by a certain amount,

00:07:42.610 --> 00:07:44.600
if you know the reserve requirement

00:07:44.600 --> 00:07:46.590
and if you assume that all the banks

00:07:46.590 --> 00:07:49.700
minimize their reserves,
that they keep only the 10%,

00:07:49.700 --> 00:07:52.850
they don't keep 11% or 12% or 20%,

00:07:52.850 --> 00:07:54.800
then what this calculation
is gonna show you

00:07:54.800 --> 00:07:58.020
is what is going to be
the maximum effect on M1

00:07:58.020 --> 00:08:01.600
given that infusion
into the monetary base.

00:08:01.600 --> 00:08:04.370
And all it is is the
amount that was infused

00:08:04.370 --> 00:08:07.100
times one over the reserve requirement.