Calculations

Question 1

Nominal to Real

Answer 1

(Nominal / Price Index) x 100

e.g. Pay Increases from £20k to £25k in 2018. However CPI increased by 6% in 2018. Calculate her real pay.
£25k x (100/106) = £23.585k

Question 2

Calculating Weighted CPI

Answer 2

Weighting (e.g. 20) x Price Index (e.g. 114)

Do the same for all categories of spending then add them up

Divide by 100 to get final answer (e.g. 105)

Question 3

Percentage Points

Answer 3

4.5% to 6% is an increase of 33%, but ONLY 1.5 PERCENTAGE POINTS

Decrease from 90% to 30% next year = -60% Points

Question 4

Percentage Difference

Answer 4

(Difference / Original Number) x 100

Question 5

Ratios

Answer 5

Highest/Lowest

Give answer as a decimal!!!

e.g. Ratio of 88,213 to 7,902
= 88213/7902
= 11.16

Question 6

Multiplier Formula

Answer 6

Multiplier = 1/MPS (Marginal Propensity to Save).

Or 1 / 1-MPC

Question 7

MPS (Marginal Propensity to Save) Formula

Answer 7

MPS (Marginal Propensity to Save) = 1 - MPC

Question 8

MPC (Marginal Propensity to Consume) Formula

Answer 8

MPC = 1 - MPS

Question 9

Comparative Advantage

Answer 9

Draw table: Two top axes’ being 1 of Good A & 1 of Good B.
Two Side Axes being Country A & Country B

Country that can produce one good with the lowest opportunity cost of the other good has Comparitive Advantage for that good

Question 10

Tax / Subsidy Incidence

Answer 10

Tax: Consumer burden is top of the square area, producer is bottom

Subsidy: Producer burden at the bottom, consumer surplus at the bottom

Question 11

Social Benefits

Answer 11

External benefits + Private benefits

Question 12

Social Costs

Answer 12

External Costs + Private Costs

Question 13

Productivity

Answer 13

Total output / Total employed workforce

Question 14

Terms of Trade

Answer 14

(Index of export prices / index of import prices) x 100

Question 15

Unit labour costs

Answer 15

Total labour costs / Total output

Question 16

MPC

Answer 16

Change in consumption / Change in income

Question 17

MPS

Answer 17

Change in savings / Change in income

Question 18

MPM (Marginal Propensity to Import)

Answer 18

Change in spending on imports / Change in income

Question 19

MPT (Marginal propensity to tax)

Answer 19

Change in tax spending / Change in income

Question 20

Labour force

Answer 20

Total employed / Total unemployment

Question 21

Labour force participation rate

Answer 21

Total labour force / Total working age population

Question 22

Gini coefficient

Answer 22

Area 1 / Area A+B

Question 23

Marginal Cost

Answer 23

Change in Total Cost as output increases by 1 unit

Question 24

Marginal Revenue

Answer 24

Change in Total Revenue as output increases by 1 unit

Question 25

Profit Max

Answer 25

MC = MR

Question 26

Rev Max

Answer 26

MR = 0

Question 27

Sales Max

Answer 27

AC = AR

Question 28

Allocative Efficiency

Answer 28

AR = MC

Question 29

Productive Efficiency

Answer 29

P = AC

Question 30

Household Savings

Answer 30

(Amount saved / Disposable income) x 100