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Get Full Access to UA - EC 111 - Class Notes - Week 23
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UA / Economics / STAT 111 / What is the main meaning of equilibrium?

What is the main meaning of equilibrium? Description

Description: Covers all formulas that will be on the exam as well as formulas that might show up on certain exam, depending on the color
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EC-111 Final Exam Formulas

What is the main meaning of equilibrium?

(Some formulas will not be on very test)

Equilibrium

- (Quantity Demanded = Quantity Supplied)

Surplus

- Above equilibrium

- QS is greater than QD

Shortage

- Below equilibrium

- QD is greater than QS

Elasticity of Demand

- (% Change in Quantity Demanded)/ (% Change in Price)

- Midpoint

o (End – Start)/ Start

o (New – Old)/ Old

Revenue

- (Price X Quantity)

GDP (Total Spending)

- (Y = C + I + G + NX)

- C = Consumption

- I = Investment

- G = Government Purchases

What does shortage mean?

- NX = Net Exports

o NX = Exports – Imports

GDP Deflator

- (100 X (Nominal GDP/ Real GDP)) Don't forget about the age old question of How do we know loftus & palmer (1974) experiment?

Nominal GDP

- (Current Quantity X Current Price)

Pizza

Pizza

Latte

Latte

Year

Price

Quantity

Price

Quantity

2010

\$10

400

\$2

1000

What does elasticity of demand mean?

- 2010

o \$10 X 400 + \$2 X 1000 = 6000

Real GDP

- Base Year (Given) X Current Quantity

Pizza

Pizza

Latte

Latte

Year

Price

Quantity

Price

Quantity

2010

\$10

400

\$2

1000

2011

\$11

500

\$2.50

1100

If you want to learn more check out What are the three key processes in and around tubules?

- Real GDP for 2011

o \$10 X 500 + \$2 X 1100 = 7200

o 2010 is base year

CPI

- (100 x (Cost of Basket in Current Year/ Cost of Basket in Base  Year)

Inflation Rate

- ((CPI this year – CPI Last year)/ CPI last year) x 100

Labor Force

- Total number of workers

- Employed + Unemployed

Unemployment Rate

- Percent of the labor force that is unemployed

- (100 x (number of unemployed/ Labor Force) We also discuss several other topics like How is the cns built?

Labor Force Participation Rate

- Percent of the adult population that is in the labor force  - (100 X (Labor Force/ Adult Participation)

Population

- Labor Force + Not in labor force

Loanable Funds

- 100 x (Labor Force/ Population)

- Excess of imports over exports

- NX less than 0 and Y is less than C + I + G

- Excess of exports over imports

- NX is greater than 0 and Y is greater than C + I + G

- Export = Imports

- NX = 0 and Y = C + I + G

National Income Identity

- Open economy

o S = I + NCO

- NX = NCO

- S – I = NCO

COULD BE ON ANY OF THE TESTS

Real Exchange Rate

- Rate at which goods and services of one country trade for the  goods and services of another

- (e X P)/ P*

o e = Nominal Exchange Rate Don't forget about the age old question of What does a hairpin-like structure indicate?
Don't forget about the age old question of What are the major types of organic molecules?
Don't forget about the age old question of What is the key formula you should use in price elasticity of demand?

o P = Domestic Price

o P* = Foreign Price

Nominal Interest Rate

- rate of growth in the dollar value of a deposit or debt

Real Interest Rate

- Nominal Interest Rate – Inflation Rate

Velocity of Money

- V = (P x Y)/ M

o (P x Y) = Nominal GDP

o M = Money Supply

o V = Velocity

Quantity Equation

- Represents entire economy

- M x V = P x Y

Value of Money

- 1/P

o P = Price Level

Fisher Effect

- Nominal Interest Rate = Inflation Rate + Real Interest Rate

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