formulae Flashcards
what’re the leakages in the circular flow
STM
Savings (S)
Taxation (T)
Imports (M)
what’re injections into the circular flow
IGX
Investment (I)
Government spending (G)
foreign Exports (X)
what happens when I+ G+ X > S+ T+ M
+ growth
what happens when I+ G+ X < S+ T+ M
- growth
what happens when I+ G+ X = S+ T+ M
macroeconomic equilibrium
what is the formula for AD
C+ I+ G+ (X-M)
Consumption
Investment
Government spending
Exports
Imports
what is the multiplier effect formula (M)?
M = 1 / (1 - MPC)
what is the (fiscal) budget deficit formula
G > T in a year
Government spending
Taxation
what is the fiscal budget surplus formula
T > G in a year
Taxation
Government spending
what is the formula for average costs (AC)
AC = TC / Q
what is the PED formula
%D in QD / %D in P
D = delta (change)
QD = quantity demanded
P = price
(always -)
what is the YED formula
%D QD / %D INCOME
(+ for normal goods, - for inferior goods)
what is the XED formula
%D QD of Good A / %D P of good B
(+ for substitutes, - for complements)
what is the PES formula
%D QS / %D P
(always +)
what is the AC formula (aka ATC)
TC \ Quantity Produced
what is the AR formula
TR / Quantity Sold
where is productive efficiency
MC=AC
what is profit maximisation
MC = MR
what is revenue maximisation
MR = 0
what is normal profit
TC = TR
what is TC
TVC + TFC
what is TR
Price x Quantity Sold
what is the GNI formula
GDP + net factor income (any income earned by domestic factors of production abroad - any income earned by foreign factors produced domestically)
what is the formula for unemployment rate
unemployed / size of labour force x100
what is taxable income
income - tax free allowance
what is the gini coefficient formula
the area between the line of perfect equality and the lorenz curve / total area beneath line of perfect equality
what is absolute poverty
<$2.15 a day
what is relative poverty
<60% of the median income
what is the marshall lerner condition
PED (x) + PED (m) > 1
what is terms of trade formula
(index of export prices / index of import prices) x 100
how do HDI scores work
0.8 and above - very high
0.7-0.79 - high
0.55-0.69 - medium
<0.55 - low
how are bond yields calculated
coupon / market price x 100
what is liquidity ratio
current assets / current liabilities x100
what is capital ratio
capital / loans x 100
what is the terms of trade formula
ToT = weighted average of export prices / weighted average of import prices X 100
calculated as an index
