Macro Final Exam Formulas
Macro Final Exam Formulas EC 111
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This 3 page Class Notes was uploaded by Carter Cox on Wednesday May 4, 2016. The Class Notes belongs to EC 111 at University of Alabama - Tuscaloosa taught by Zirlott in Spring 2015. Since its upload, it has received 82 views. For similar materials see Principles of Macroeconomics in Economcs at University of Alabama - Tuscaloosa.
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Date Created: 05/04/16
EC-111 Final Exam Formulas (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 - 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 - 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 - 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) 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) Trade Deficit - Excess of imports over exports - NX less than 0 and Y is less than C + I + G Trade Surplus - Excess of exports over imports - NX is greater than 0 and Y is greater than C + I + G Trade Balance - 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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