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Get Full Access to UA - EC 111 - Class Notes - Week 23
Get Full Access to UA - EC 111 - Class Notes - Week 23

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UA / Economics / EC 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) If you want to learn more check out What is source monitoring?

- (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))

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 effects of aldosterone?

- 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) We also discuss several other topics like How is a cns built?

Inflation Rate

- ((CPI this year – CPI Last year)/ CPI last year) x 100 Don't forget about the age old question of What are the characteristics of living matter?

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)

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 If you want to learn more check out What is the key formula you should use in price elasticity of demand?
If you want to learn more check out What does a hairpin-like structure indicate?

- 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

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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