Equations Flashcards
1
Q
MPC
A
MPC = (Change in consumption on domestic output)/(change in income)
2
Q
MPW
A
Change in total withdraws / Change in Income
3
Q
MPW and MPC Relationship
A
1 = MPC + MPW
4
Q
Aggregate Demand
A
AD = C + I + G + Xn
5
Q
Spending Multiplier
A
Spending Multiplier = 1/1-MPC = 1/MPW
6
Q
Changes in Equilibrium GDP (Shift in AD curve)
A
spending multiplier * initial change in spending
7
Q
GDP Deflator
A
Nominal GDP/Real GDP
8
Q
Interest rate of Bond
A
Interest payment / price of bond
9
Q
Reserve ratio
A
desired reserves/ deposits
10
Q
Excess reserve
A
cash reserves - desired reserves
11
Q
Money multiplier
A
1/reserve ratio
12
Q
change in money supply
A
change in excess reserve * money multiplier
13
Q
GDP expenditure equation
A
C + I + G + Xn(X-M)
14
Q
Per Capita GDP
A
GDP/Population
15
Q
Real Income
A
=Nominal Income/CPI (in hundredths)
