FINAL by <3

Question 1

Formula and Use

Forward interest rate

Answer 1

Interest rate beginning in the future

“expected interest rate”

Question 2

Long term interest rate (Liquidity premium theory)

Answer 2

Question 3

Formula

Long term interest rate (expectation theory)

Answer 3

Question 4

Formula and Use

Trade to GDP Ratio

Answer 4

How much of the GDP comes from Trades

Question 5

Formula and Use

Point Price elasticity of Demand

Answer 5

How sensitive is demand to a change in price

Question 6

Formula and Use

Point Price Elasticity of Supply

Answer 6

How sensitive is Supply to a change in price

Question 7

Formula and Use

Arc Elasticity of Demand

Answer 7

How sensitive is demand to a change in price between two prices

Question 8

Formula and Use

Income elasticity of Demand

Answer 8

• How sensitive demand is to changes in income
• Determine if goods are normal or inferior

Question 9

Formula and Use

Cross-price elasticity of Demand

Answer 9

• Determine how sensitive demand is to changes in the price of another good
• Determine if goods are subsititutes or complements

Question 10

Elastic demand

Answer 10

Elasticity>1

Question 11

Inelastic demand

Answer 11

elasticity<1

Question 12

Elasticity=1

Answer 12

Unit elastic

Question 13

Passthrough formula

Answer 13

What portion of the tax is passed to the consumer

the side that is less elastic (steeper) will pay more of the tax

Question 14

Formula and definition

Labour force

Answer 14

People working or looking for work

Question 15

Formula

Unemployement Rate

Answer 15

Question 16

Formula

Employment rate

Answer 16

Question 17

Formula

Labour Force Participation rate

Answer 17

Question 18

Earnings consists of:

Answer 18

Wage x Units of time= Earnings

Question 19

Total compensation consists of:

Answer 19

Earnings+Benefits= Total compensation

Question 20

Income consists of:

Answer 20

Total compensation+Unearned Income= Income

Question 21

Formula and use

Marginal Product of Labour

Answer 21

Additional output that one more unit of labour will generate

Question 22

Marginal Product of Capital

Answer 22

Additional output that one more unit of capital will generate

Question 23

Marginal Revenue product of Labour

Answer 23

Amount of revenue one aditional worker generates

Question 24

Profit Maximization of L

Answer 24

Profit is maximized if MR=MC

Question 25

Payroll tax effect on the Labour Demand formula

Answer 25

Question 26

Wage subsidies effect on the Labour demand formula

Answer 26

Question 27

Marginal Rate of Technical Substitution

Answer 27

How much capital must be given up to get one more unit of labour (isoquant slope)

Question 28

Marginal Rate of subsititution of Labour/ Indifference curve

Answer 28

Question 29

Expected value/return | Risk preference

Answer 29

Average return of a gamble based on probabilites

Question 30

Standard deviation | Risk Preference

Answer 30

Risk related to the gamble | Since you cant add st.deviations, find variance then square root

Question 31

# Formula Variance

Answer 31

Question 32

# Formula+def Expected utility

Answer 32

Utility a person expects to receive from an uncertain event

Question 33

# Formula Insurance premium

Answer 33

Payout *x* probability of payout

Question 34

# Formula Present value

Answer 34

Question 35

# Formula+defintion Nominal Rate

Answer 35

Return/Interest rate unadjusted for inflation

Question 36

Real return rate | Also called fisher equation

Answer 36

Return/Interest rate adjusted for inflation

Question 37

Current Yield of a Coupon Bond

Answer 37

CY=Coupon/Current price