macro unit 2

equations

Gross Domestic Product (GDP)

C+I+G+(X-N)

% Change in GDP

% Change in GDP = (Year 2-Year 1) / (Year 1) x (100)

Labor Force

Labor Force = Employment + Unemployment

Unemployment Rate

Unemployment Rate= Unemployment / Labor Force

Labor Force Participation

Labor Force Participation = (Labor Force / Population) x 100

The Natural Rate of Unemployment

NRU = Frictional + Structural

Consumer Price Index

CPI = (Price of market basket/Price of market basket in base year) x 100

GDP Deflator

GDP Deflator = (Nominal GDP/Real GDP) x 100

Nominal GDP

Nominal GDP = (Real GDP x GDP Deflator) / 100

Real GDP

Real GDP = (Nominal GDP x 100) / GDP Deflator

Real Interest Rate

Real Interest Rate = Nominal Interest Rate - Expected Inflation

Expected Inflation

Expected Inflation = Nominal Interest Rate - Real Interest Rate

Nominal Interest Rate

Nominal Interest Rate = Real Interest Rate + Inflation