Paper 3 key equations and conditions (MACRO)

Question 1

GDP

Answer 1

AD equation

Question 2

Nominal GDP

Answer 2

Quantity X Current prices

Question 3

Real GDP

Answer 3

Q X Constatnt prices (prices in base year) or Nominal GDP/Price Index X100

Question 4

GDP Deflator

Answer 4

Nominal GDP/ Real GDP X100

Question 5

GNI

Answer 5

GDP + Net factor income

Question 6

Green GDP

Answer 6

GDP - environmental costs

Question 7

AD

Answer 7

C+I+G+(X-M)

Question 8

Multiplier

Answer 8

1/1-MPC

Question 9

Unemployment rate

Answer 9

% Change in Unemployed/Labour Force

Question 10

Index Number

Answer 10

Raw Number/ Base Year Raw Number X100

Question 11

Gini Coefficient

Answer 11

Area between LC & LOPE/ Total area beneath LOPE

Question 12

Marshall-Lener condition (ˣ=exports ᵐ=imports)

Answer 12

PEDˣ + PEDᵐ>1

Question 13

Terms of Trade

Answer 13

Average Index Price of Equity/ Average Index price of imports X100

Question 14

Taxable Income

Answer 14

Total income - Tax free allowance

Question 15

Average rate of Tax

Answer 15

Total income Tax Paid/Total Income X 100

Question 16

Marginal Rate of Tax

Answer 16

Change (not %change) in Total Income Tax Paid/Total income X100

Question 17

Weighted Price Index (CPI)

Answer 17

1) Convert prices to index
2)Multiply the index by the weights
3) Add up weighted prices
4)Divide by total weighted prices

Question 18

Wat are the 4 liquid assets in a commercial bank

Answer 18

1)Cash
2) Reserves at the BofE
3)Money at short call (Interbank lending)
4) Short term investment

Question 19

Where is capital found in a Commercial Banks balance sheet

Answer 19

Liabilities

Question 20

What two things make up capital in a balance sheet

Answer 20

Shareholders Funds
Retained Profit

Question 21

National Income

Answer 21

National income = Initial Injection x Multiplier