macro econ equations

Question 1

what is the equation for the GDP deflator

Answer 1

(Nominal GDP/ real GDP) x 100

Question 2

what is the inflation rate in terms of the GDP deflator

Answer 2

Pt - P(t-1) // P(t-1)

Question 3

what is the equation for the unemployment rate in terms of unemployment and labour force

Answer 3

u = U/L

Question 4

What equation make disposable income

Answer 4

Yd = Y-T

Question 5

what is the consumption function

Answer 5

Yd = C(Yd)

Question 6

what does C1 represent

Answer 6

MPC

Question 7

what does C0 represent

Answer 7

autonomous spending

Question 8

what is one assumption we make when we assume Y=Z

Answer 8

firms do not hold inventories

Question 9

what is the equation for the multiplier

Answer 9

1/(1-C1)

Question 10

what is the equation for output including C1 and C0 and what have we assumed

Answer 10

Y = C0+C1(Y-T) + I + G
assume I is constant as in the SR its a given variable

Question 11

what is the private saving function

Answer 11

S = Yd - C
S = Y - T - C

Question 12

what saving function has to apply for the goods market to be in eq.

Answer 12

I = S + (T-G)

Question 13

what is the money demand function

Answer 13

Md = £YL(i)
(nominal income x function of interest rates)

Question 14

how do you calculate the interest rate of a bond

Answer 14

Pe-Pb // Pb

Question 15

how do you calculate the price of the bond

Answer 15

Pb = Pe//1+i

Question 16

how can the CB affect interest rate

Answer 16

by buying and selling bonds

Question 17

how do CB’s decrease interest rates

Answer 17

increase the money supply (buy bonds)

Question 18

how does the demand for reserves relate to the Md

Answer 18

Hd = xMd = x£YL(i)

Question 19

what is the IS relation

Answer 19

Z=Y= C(Y-T) +I(Y,i)+G

Question 20

what does I depend on

Answer 20

I = I(Y,i)

Question 21

what is the upward sloping LM relation

Answer 21

M/P = YL(i)

Question 22

what is the real interest rate equation

Answer 22

1+rt = (1-it)//(1+expected inflation)

Question 23

when nominal interest and expected inflation are below 10% what can you estimate

Answer 23

r = it- expected inflation next year

Question 24

how do you calculate the risk premium

Answer 24

x = P(1+i)//(1-P)

Question 25

what is the capital ratio

Answer 25

Capital/assets

Question 26

what is the leverage ratio

Answer 26

assets/capital

Question 27

what is r+x

Answer 27

the real borrowing rate

Question 28

what is the extended IS equation

Answer 28

Y = C(Y-T) + I(i,r+x) + G

Question 29

what is the wage equation

Answer 29

W = Pe F(u,z)

Question 30

how do firms set price

Answer 30

P = (1+m)What

Question 31

is the wage real wage equation

Answer 31

W/P = F(u,z)

Question 32

what is the price setting relation

Answer 32

W/P = 1/1+m

Question 33

when does the natural rate of unemployment in equilibrium in the wage/PS market

Answer 33

1/1+m = F(u,z)

Question 34

how can F(u,z) be represented

Answer 34

1-au+z

Question 35

what equation and variation of equation can be used to link inflation expected inflation and unemployment (inflation = !)

Answer 35

!t = !e + (m+z) - AUt assuming expectations are de-anchored: !t - !(t-1) = (m+z) - AUt

Question 36

what is the phillips curve including Un

Answer 36

!t - !e = -a(Ut-Un)