econ formulas

Question 1

Economic Growth

Answer 1

Economic Growth Rate =
GDP in Current Period - GDP in Previous Period /
GDP in Previous Period × 100

• Measures the percentage change in real GDP over time.

Real GDP = Nominal GDP/Price Index (CPI) × 100

• Adjusts GDP for inflation using the Consumer Price Index (CPI).

Question 2

Inflation Rate

Answer 2

Inflation Rate = CPI in Current Year - CPI in Previous Year / CPI in Previous Year × 100

• Measures the percentage change in the Consumer Price Index (CPI) from one period to the next.

Question 3

Unemployment Rate

Answer 3

Unemployment Rate
= Number of Unemployed / Labor Force × 100

• Indicates the percentage of the labor force that is unemployed.

Question 4

Labor Force Participation Rate

Answer 4

Labor Force Participation Rate
= LaborForce / Working-AgePopulation
× 100

• Measures the proportion of the working-age population that is part of the labor force

Question 5

Balance of Payments (Current Account Balance)

Answer 5

Current Account Balance
= Exports - Imports + Net Income
+ Net Current Transfers

• Summarises a nation’s transactions with the rest of the world, including trade, income, and transfers.

Question 6

Terms of Trade (ToT):

Answer 6

Terms of Trade =
Index of Export Prices / Index of Import Prices × 100

• Measures a country’s export prices relative to its import prices.

Question 7

Price Elasticity of Demand (PED):

Answer 7

PED = % Change in QTY Demanded / % Change in Price

• Measures how responsive quantity demanded is to changes in price.

% change in $ = new price - old price / old price

Question 8

Budget Deficit or Surplus:

Answer 8

Budget Balance = Government Revenue - Government Spending

• A positive balance is a surplus; a negative balance is a deficit.

Question 9

Exchange Rate Change:

Answer 9

Exchange Rate Change
= New Exchange Rate - Old Exchange Rate / Old Exchange Rate × 100

• Measures the percentage change in the value of a currency relative to another.