Formulae

Question 1

Present Value Formula

Answer 1

PV = FV/(1+i)^t

Question 2

Future Value Formula

Answer 2

FV = PV(1+i)^t

Question 3

GDP Deflator

Answer 3

Nominal GDP/Real GDP * 1000

Question 4

Real GDP

Answer 4

Prices of base year, quantities of given year

Question 5

Expenditure approach

Answer 5

C + G + I + X - IM

Question 6

Income Approach

Answer 6

Profits + Wages + Interest payments + rent (for every firm summed)

Question 7

CPI (From market baskets)

Answer 7

Market basket price given year / market basket price of base year (using quantities of base year, obv)

Question 8

Real interest rate (Fisher equation)

Answer 8

Nominal interest rate - inflation rate

Question 9

Real GDP growth rate from Nominal GDP growth rate and inflation rate

Answer 9

Nominal GDP growth rate - inflation growth rate

Question 10

Productivity per worker (GDP/L)

Answer 10

A*F(K/L, H/L)

Question 11

Productivity

Answer 11

GDP/employed

Question 12

Production function estimate

Answer 12

A * (K/L)^1/3 * (H/L)^2/3

Question 13

Rule of 70

Answer 13

Time for GDP to double = 70/growth rate

Question 14

GDP (with national savings, closed economy)

Answer 14

GDP = C + G + S_national

Question 15

S_National (open)

Answer 15

S_National = I + NX ||| also GDP - C - G = I + NX = S_National

Question 16

Investment spending) vs private savings and co. Formula

Answer 16

I = S_private + (T - G) + (IM - X)

Question 17

Inflation Rate

Answer 17

CPI year 2 - CPI year 1 / CPI year 1

Question 18

Value of money after inflation

Answer 18

Real Value = Nominal Value/(1+inflation rate)

Question 19

Money multiplier (accounting for people holding on to some amount of money)

Answer 19

(1 + CiC/CD)/(CiC/CD + R/CD)

CiC = Currency in circulation
CD = Chequable deposits
R = Reserves

Question 20

∆Spending impact on GDP vs ∆Transfers

Answer 20

GDP change with ∆transfers = ∆GDP = ∆TRMPC(1/(1-MPC))
GDP change with ∆spending = ∆G*(1/(1-MPC))

Question 21

The formula for money multiplier with currency in circulation

Answer 21

Money Multiplier formula:

(1+C)/(R+C)

C = Currency In Circulation / Chequable Deposits
R = Reserves / Chequable Deposits

So formula really equals

(1 + CiC/CD)/(R/CD + CiC/CD)

Question 22

Calculate excess reserves given an amount of chequable deposits and reserve ratio

Answer 22

Total reserves - (reserve ratio * chequable deposits) = excess reserves

Question 23

Average Growth Rate of GDP over multiple years, given some n increases

Answer 23

geometric mean: nth root of all n increases multiplied.

So if the GDP is 100 billion dollars in year 1, and it grows 2% in year 2, 3.5% in year 3:

	100*(1+0.02)*(1.0.035) = actual growth

	average growth G -> 100*(1+G)^2 = 100*(1+0.02)*(1+0.035)
	G = sqrt((1+0.02)*(1+0.035))-1

Question 24

GDP deflator

Answer 24

nominal/real * 100

Question 25

Natural rate of unemployment

Answer 25

Frictional + structural = natural

Question 26

Real income

Answer 26

Nominal income/price level

Question 27

Real wage

Answer 27

Nominal wage/Price level

Question 28

Aggregate production function

Answer 28

GDP = A * F(K,L,H) ||| L is labor force size

Question 29

Savings_private

Answer 29

GDP - T + TR - C

Question 30

Budget Balance

Answer 30

T - TR - G

Question 31

Savings_national (open economy)

Answer 31

I + NFI

Question 32

Unplanned inventory investment from GDP and AE_planned

Answer 32

GDP - AE_planned

Question 33

Money supply (chequable only, no loans made yet)

Answer 33

Bank reserves/reserve ratio

Question 34

Output gap

Answer 34

actual aggregate output - potential output / potential output * 100

Question 35

Money multiplier with Tax

Answer 35

1/(1 - MPC*(1-t)) ||| t is the tax rate

Question 36

Value of money after inflation

Answer 36

nominal value/(1+inflation rate)

Question 37

Trade balance, national savings, domestic investment, taxes, and gov spending

Answer 37

TB = (S_national - I) + (T - G) ||| Note how that if gov spending is high enough, it forces a negative trade balance and/or smaller investment spending