Equations

Question 1

GDP (Expenditure Approach)

Answer 1

C+I+G+(X-IM) = GDP

C= personal consumption
I= Investment
G= govt spending
X= exports
IM= imports

Question 2

Economic Growth

Answer 2

Real GDP (current) - Real GDP (previous)
-----------------------------------------------------------    x 100
                 Real GDP (previous)

Question 3

Real GDP

Answer 3

nominal GDP
——————— x 100
Price deflator

Price deflator= CPI

Question 4

Real Interest Rate

Answer 4

nominal interest - inflation = Real interest rate

Question 5

Unemployment rate (U3)

Answer 5

   total labor force

Question 6

Labor participation rate

Answer 6

Labor force
————————————- x 100
available adult population

Question 7

Inflation rate

Answer 7

CPI (current year) - CPI (previous year)
——————————————————— x 100
CPI (previous year)

measures 300 goods

Question 8

CPI (price index)

Answer 8

Price of market basket
—————————————————- x 100
Price of market basket in base year

Note: CPI is always 100 in a base year

Question 9

GDP Per capita

Answer 9

population

Question 10

GDP (Income Approach)

Answer 10

W + R + I + P + Sa = GDP

W= wages
R= rent
I= interest
P= profits
Sa = statistical adjustments

Question 11

Formula to find Real Income/Wages/Profit

same formula for all

Answer 11

nominal income (current)
———————————— x 100
CPI (index)

Question 12

MPC

Answer 12

change in disposable income

Question 13

MS (Spending multiplier)

Answer 13

MPS

Question 14

Mt (tax multiplier)

Answer 14

MPS

Question 15

Output (comparative)

Answer 15

x = y/x

Question 16

Input

Answer 16

x= x/y
Lower number = advantage
typically in hrs

Question 17

Fisher Formula

Answer 17

i = r + pi

i= nominal interest
r= real interest
pi= inflation

Question 18

Required reserves

Answer 18

DD x RR

Question 19

Total reserves

Answer 19

Excess + required

Question 20

Money multiplier

Answer 20

1/rr

excess reserves x mm = how much $ can become

Question 21

Monetary exchange of $

Answer 21

MV = PY
M= MS
V =  velocity of $
P= PL
Y= RGPD

MV and PY = NOMINAL GDP

Question 22

Current account

Answer 22

money in - money out

exports- imports

Question 23

Trade balance

Answer 23

Exp- Imp

Question 24

Capital account

Answer 24

Assets sold- assets bought

stocks, bonds

Question 25

1$ = 20 pesos
$ to pesos
pesos to $

Answer 25

price x exchange rate

price/exchange rate

Question 26

Productivity

Answer 26

RGDP/worker hrs