Unit #2 Equations

Question 1

GDP using the expenditure approach

Answer 1

GDP = C + I + G + (X-M)

Question 2

GDP using the income approach

Answer 2

GDP = wages + interest + rents + profits
(WIRP)

Question 3

GDP per capita

Answer 3

GDP/ population

Question 4

Growth rates

Answer 4

(difference/original x 100)
(final - intial)/initial x 100

Question 5

Unemployment rate

Answer 5

Unemployed/labor force X 100

Question 6

Labor force participation rate

Answer 6

Labor force/ adult working age population X 100

or

unemployed + employed / adult working age population X 100

adult working age population refers to people who are adults and includes ppl who are no longer searching for jobs, retired, or institutionalized

Question 7

Natural unemployment rate

Answer 7

Frictional (temporary) + structural (workers don’t have the skills)

Question 8

Total unemployment rate

Answer 8

Natural + cyclical
or
frictional + structural + cyclical

Question 9

CPI (consumer price index)

Answer 9

market basket in a given year/market basket in base year x 100

mb = price (current year) * quantity (base year)

CPI measures changes in prices over time

Question 10

Inflation rate

Answer 10

% change in CPI = (CPI (current) - CPI (base))/CPI (base) x 100

Question 11

Triangle cheat code nominal, deflator, and real

Answer 11

Nominal on top over deflator and real

Question 12

Nominal

Answer 12

Deflator X real / 100

Question 13

GDP Deflator

Answer 13

Nominal/real X 100

Question 14

Real

Answer 14

Nominal/ deflator X 100

Question 15

Real %

Answer 15

Nominal % — inflation

Question 16

Inflation rate

Answer 16

% change in GDP deflator
[GDP(final)-GDP(initial) / GDP(initial)] x 100

Question 17

Market basket calculations

Answer 17

P (current) x Q (base)

Question 18

Real GDP calculation

Answer 18

P (base year) x Q (current year)