MACRO FORMULAS

Opportunity Cost per Unit

Potential Loss ÷ Potential Gain

Equilibrium Price (P) and Quantity (Q)

Set Qd = Qs, solve for P, then substitute P into either equation to find Q*

Surplus

Qs − Qd

Shortage

Qd − Qs

GDP (Expenditure Approach)

Consumption + Investment + Government Purchases + Net Exports

GDP (Income Approach)

Wages + Rent + Profit + Interest Payments

GDP (Value Added Approach)

Firm's Revenue − Cost of Intermediate Inputs

Nominal GDP

Output × Current Prices

Real GDP

Output × Constant Prices

Real GDP from GDP Deflator

(Nominal GDP ÷ GDP Deflator) × 100

Nominal GDP per Capita

(Nominal GDP ÷ Population) × 100

Real GDP per Capita

(Real GDP ÷ Population) × 100

Real Wages

(Nominal Wages ÷ CPI) × 100

Consumer Price Index (CPI)

(Cost of Basket in Current Prices ÷ Cost of Basket in Base Year) × 100

GDP Deflator

(Nominal GDP ÷ Real GDP) × 100

Inflation Rate (CPI)

[(CPI Current − CPI Previous) ÷ CPI Previous] × 100

Inflation Rate (GDP Deflator)

[(GDP Deflator Current − GDP Deflator Previous) ÷ GDP Deflator Previous] × 100

Equation of Exchange

M × V = Price Level × Real GDP

Quantity Theory of Money

M × V = Price Level × Real GDP; V and Real GDP assumed constant

Growth Rate Form of Quantity Theory

%ΔM + %ΔV = %ΔPrice Level + %ΔReal GDP

Unemployment Rate

[Unemployed ÷ (Employed + Unemployed)] × 100

Labor Force

Employed + Unemployed Workers

Who Counts as Unemployed?

People without a job who are actively looking for one; non-searchers are excluded from the labor force

Labor Force Participation Rate

(Labor Force ÷ Civilian Noninstitutionalized Population) × 100

Working-Age Population Ratio

(Employed Workers ÷ Civilian Noninstitutionalized Population) × 100

Money Multiplier

(1 ÷ Required Reserve Ratio) × 100

Change in Money Supply

Money Multiplier × Reserve Injection

Interest Rate (Bond)

[(Face Value − Bond Price) ÷ Bond Price] × 100

Interest Rate (Interest Payment)

(Interest Payment ÷ Bond Price) × 100

Real Interest Rate

Nominal Interest Rate − Inflation Rate