Formules Flashcards
GDP
C + G + I + EX - IM
Inet
I - dépréciation
rGDP
Constant price ( base year )
QAPA + QBPB
nGDP
Current price
QAPA + QBPB
Deflator
Indicator of price of productions
100(nGDP/rGDP)
Standard of living
rGDP/pop
Inequalities are not captured
NX < 0
Net importing economy
EX < IM
S < I
NX > 0
Net exporting economy
EX > IM
S > I
QN
Q0(1+g)^N
g (average annual growth)
(QN/Q0)^(1/N) - 1
g (overall growth over a period)
(QN/Q0) - 1
N
Ln(QN/Q0)/ln(1+g)
PV
CF/(1+r) + CF/(1+r)^2 + CF/(1+r)^3…
gAB
gA + gB
gA/B
gA - gB
g(x^a)
ag(x)
Decomposition of GDP
Y = Y/H * H/L * L/Pop * Pop
Decomposition of standard of living
Y/Pop = Y/H * H/L * L/Pop
Total production
Y
Total number of hours worked
H
Total number of jobs
L
Total population
Pop
Hourly productivity
Y/H
Hours worked per job
H/L
Proportion of total population employed
L/Pop
Labor productivity
Y/L
What are the main sources of growth in standard of living and which one can promote a constant growth ?
- H/L : limit of jour worked in a day
- L/Pop : limit of people working when the population is fixed
- Y/H : no limit (PRODUCTIVITY)
Number 3 is then the one that can promote constant growth
What is the production function?
Y = AF(K, L, Kh, N)
A is associated with thing that improve productivity (technology)
What are the 2 characteristics of the production function?
- Constant returns to scale
- Decreasing marginal returns
What is constant returns to scale ?
xY = AF(xK, xL, xKh, xN)
What is decreasing marginal returns ?
Smaller and smaller increase in Y when K increase
What supposed convergence ?
That economy with high standard of living should have a low growth
And that economy with low standards of living should have a higher growth
Convergence is the result to what ?
Decreasing marginal returns
Unit labor cost
Salary / nb of unit
What are the 2 price index of inflation?
- CPI
- GDP deflator
CPI is calculated with what in mind ?
Consumer
GDP deflator is calculated with what in mind ?
Production
What are the consequences of inflation?
Purchasing power of income decreases
Purchasing power of saving decreases
Interest rates increase
Basket price
CPI
Inflation (gCPI)
PAQA(base) + PBQB(base)
100(BP/BP(base))
(CPI/CPI(base)) - 1
Or
(BP/BP(base)) - 1
What is underlying inflation?
It excluded volatile price items
Deflator inflation
100(nGDP/rGDP)
How to compare comparables of different years ?
With the CPI
Fisher equation
i = r + PI
Nominal interest rate
i
Real interest rate
r
Inflation
PI
Net nominal income after taxes
(1-tax rate)*i
Net real income
Net nominal income after tax - PI
(1-tax rate)*i - PI
Employed persons
L
Unemployed persons
U
Active, labour force
A = L + U
Inactive, not employed not unemployed
I = pop15+ - A
Participation rate (activity rate)
a = 100(A/Pop15+)
Unemployment rate
u = 100(U/A)
Employment rate
e = 100(L/pop15+)
What are the 3 types of unemployment ?
Cyclical
Frictional
Structural
Which type of unemployment is caused by rapid fluctuations (rapid shift in labour demand)?
Cyclical
Which type of unemployment is caused by the time it takes to find a job?
Frictional (turnover)
Which type of unemployment by misguided economic policies ?
Structural
People want to work but companies don’t want to hire them ( high wages)
People don’t want to work but companies want to hire them (low wages)
What is natural unemployment?
It frictional and structural unemployment
What is net lender of funds
S > I
What is net borrower of funds
S < I
What is interest rate for borrower and for lender
A cost for borrower
A return for lender
What is private saving (Sp)
Y - C - T
What is gouvernement savings (Sg)
T - G
What is NX
EX - IM
S - I
Sp + Sg - I
Balanced budget
(T - G) = 0
Budget surplus
(T - G) > 0
Budget deficit
(T - G) < 0
What are the assets of bank of Canada
Federal bonds
International reserves
What are the assets of bank of a commercial banks
Loans
Federal bonds
Deposits at the central bank
Bills and coins
What are the liabilities and net worth of the bank of Canada
Bank bills in circulation
Bank deposits
Government deposits
Net worth
What are the liabilities and net worth of a commercial bank ?
Public deposits
Government deposits
Net worth
The exchange equation
MV = PY
In the exchange equation what is M
Money supply
In the exchange equation what is V
Velocity ( changes hands )
In the exchange equation what is P
Price
In the exchange equation what is Y
rGDP
The growth formula of MV = PY if velocity is constant
gM = gP + gY
Money multiplier
m = 1/R
What is R in the money multiplier formula ?
The reserve ratio
How to find the total deposits of the bank
1/R
What is money neutrality ?
Nominal variables (PI, i, gM, gP) have no effect on real variables (gY, r) in the long run
What is the r in the long run
r = r* + teta
What is the r in the short run
r = i - PI
What is i in the long run
i = r + PI
i = r* + teta + PI
What is i in the short run ?
Determined by the money market
(When i changes in the money market, we’ll assume that the short run impact will be equivalent on r (PI is stable))
What is expansion in the fluctuation of production activities
It’s from a trough to a peak
It’s the recovery (catching up to the previous peak) + the expansion (more production relative to the previous peak)
What is contraction in the fluctuation of production activities
It’s from a peak to a trough
A recession is a significant contraction
