AP Economics Formulas

Question 1

GDP: Income Approach

Answer 1

R+W+P+I = NI + Indirect Business Taxes = NDP + Depreciation = GDP

Question 2

PI =

Answer 2

NI - Corporate Profits Tax - Retained Earnings + Transfer Payments

Question 3

Profits =

Answer 3

Income + Dividends + Retained Earnings + Corporate Profit Taxes

Question 4

Real GDP

Answer 4

Nominal GDP / GDP Deflator x 100

Question 5

GDP Growth Rate

Answer 5

(Current - Last)/ Last x 100

Question 6

Inflation Rate

Answer 6

CPI - Last Year CPI / Last year CPI x 100

Question 7

Money Multiplier

Answer 7

1/ Required Reserve Ratio

Question 8

Quantity of Money

Answer 8

MV = PQ = Y

Question 9

Spending Multiplier

Answer 9

1/MPS

Question 10

Tax Multiplier

Answer 10

-MPC/MPS

Question 11

Phases of the Business Cycle

Answer 11

expansion (economic growth), peak (demand > as), contraction (output will fall and recession), trough

Question 12

CPI =

Answer 12

Price Now (Total or not) / Price Former (Total or not) x 100

Question 13

frictional unemployment

Answer 13

in between jobs has employable skills (teacher resigns to look for a better salary)

Question 14

structural unemployment

Answer 14

changing structure of the economy (auto company lays off worker and replaces him with a machine)

Question 15

cyclical unemployment

Answer 15

recession contraction phase causes someone to lose a job (laid off because of failing sales)

Question 16

Naturla rate of unemployment includes

Answer 16

structural and frictional