AP Macro Formulas

Disposable Income

Gross income - taxes

Unemployment rate

unemployed / labor force × 100

Labor Force

employed + unemployed (actively looking)

Labor Force Participation

labor force / population above 16 × 100

Percent change

new-old / old × 100

GDP Deflator (Price Index)

nominal GDP/ real GDP × 100

CPI (consumer price index)

cost of basket in current year / cost in base year

Real interest rate

nominal- inflation

Real wage rate

nominal wage / CPI × 100

Inflation rate

same as percent change formula

Spending Multiplier

1 / MPS or 1 / 1 - MPC

Money Multiplier

1 / Reserve Requirement

Tax Multiplier

MPC × 1 / MPS or MPC/MPS

One less than the spending multiplier

The Tax Multiplier is always…

One

MPS and MPC always equal…

MPC

△ in consumption / change in income

MPS

△ in saving / change in income