Search
Create
Formulas: Ch. 1 - 5, 12 - 20, 6 - 9, 11
STUDY
Flashcards
Learn
Write
Spell
Test
PLAY
Match
Gravity
Terms in this set (33)
Doubling Time Formula
70
−−−−−−−−−−−−−−−−−−
Annual Percentage Change in Whatever You are Looking At
Inflation Rate
(Year 2 CPI − Year 1 CPI)
−−−−−−−−−−−−−−− × 100%
Year 1 CPI
Real GDP
Nominal GDP
−−−−−−−−−− × 100%
GDP price index
GDP deflator
Nominal GDP
−−−−−−−− × 100%
Real GDP
Annual Change in real GDP per capita
Year 2 real GDP per capita
- Year 1 real GDP per capita
−−−−−−−−−−−−−−−−− × 100%
Year 1 real GDP per capita
Labor Force Participation Rate (LFPR)
Labor Force
−−−−−−−−−−−−−−−−−− × 100%
Civilian Non-Institutionalized Population
Labor Force
Employed + Unemployed of Working Age
Unemployment Rate
Number of
Unemployed Persons
−−−−−−−−−−−−− × 100%
Labor Force
Employment to Population Ratio
Number of Employed
Persons in Labor Force
−−−−−−−−−−−−−−
Total Population
Consumer Price Index (CPI)
Price of goods in current year
−−−−−−−−−−−−−−−−−− × 100%
Price of goods in base year
Real Interest Rate
Nominal Interest Rate − Inflation Rate
Marginal Propensity to Consume (MPC)
Change in expenditure
−−−−−−−−−−−−−−−−−−
Change in Disposable Income
∆C
−−
∆Y
Marginal Propensity to Save
1 - MPC
Transfer Payment Multiplier
MPC
−−−−−−
(1 − MPC)
Tax Multiplier
−MPC
−−−−−−
(1 − MPC)
Spending Multiplier
1
−−−−−−
(1 − MPC)
Required Reserve Ratio (RR)
Reserve that bank is
required to hold in cash
−−−−−−−−−−−−−−−
Total liability
Money Multiplier
1
−−−−−−−−−−−−−−
Required Reserve Ratio
Gross Domestic Product (GDP)
∑(final goods & services) = ∑(value added by each firm)
Aggregate spending on domestically produced final goods & services
∑(factor income earned by households from firms in the economy)
Price Index
Cost of market basket in given year
−−−−−−−−−−−−−−−−−−−−−−
Cost of market basket in base year
Average Product of Labor
Total Product of Labor
−−−−−−−−−−−−−−−−−−−−−−
Number of Units of Labor Employed
Q
−
L
Marginal Product of Labor
Change In Output (Y)
−−−−−−−−−−−−−−−
Unit Change In Labor (L)
∆Y
−−
∆L
Average Fixed Cost (AFC)
Fixed Costs of Production (FC)
−−−−−−−−−−−−−−−−−−−−
Quantity of Output Produced (Q)
Average Variable Cost (AVC)
Firm's Variable Costs
(Labor, Electricity, Etc.)
−−−−−−−−−−−−−−−−−−
Quantity Of Output Produced
Average Total Cost (ATC)
Average Fixed Cost (AFC)
⁺ Average Variable Cost (AVC)
Marginal Cost (MC)
Change in Costs
−−−−−−−−−−−−
Change in Quantity
Debt-to-GDP Ratio
Government Debt
(Cumulative Amount)
−−−−−−−−−−−−−−−
Gross Domestic Product
(GDP) (yearly)
Midpoint Formula
[(x₁ + x₂)/2, (y₁ + y₂)/2]
Price Elasticity of Demand
dQ/Q
−−−−
dP/P
Cross-Price Elasticity of Demand
Percentage Change in
Quantity Demanded of X
−−−−−−−−−−−−−−−
Percentage Change in
Price of Y
Percentage change in Qx =
(Q1-Q2) / [1/2 (Q1+Q2)]
where
Q1 = initial Qd of X, and
Q2 = new Qd of X.
Percentage change in Py = (P1-P2) / [1/2 (P1 + P2)]
where
P1 = initial Price of Y, and
P2 = New Price of Y.
Putting the two equations together:
Exy = {(Q1-Q2) / [1/2 (Q1+Q2)] } / {(P1-P2) / [1/2 (P1 + P2)]}
Income Elasticity of Demand
% Change in Demand
−−−−−−−−−−−−−
% Change in Income
{(Y1 + Y2) / (Q1 + Q2)} × (∆Q / ∆Y)
Price Elasticity of Supply
% Change in Quantity Supplied
−−−−−−−−−−−−−−−−−−−
% Change in Price
∆Qs
−−−
∆P
Money Demand vs. Aggregate Price Level
Money demand model:
Md = P × Ld(Y, i)
where
Md = demand for nominal money balances (M1)
P = aggregate price level (CPI or GDP deflator)
All else being equal (in other words, constant):
Y = real income (real GDP)
Ld = demand for liquidity function
i = nominal interest rate on non-money assets
;