AP Macroeconomics Formulas

These flashcards cover key formulas and definitions relevant to AP Macroeconomics, particularly focusing on economic indicators, business cycles, and aspects of international trade and finance.

GDP

C + G + I + Xn.

GDP Growth Rate

Year 2 GDP – Year 1 GDP / Year 1 GDP x 100.

GDP Deflator

Nominal GDP / Real GDP x 100.

Real GDP

(Nominal GDP / GDP Deflator) x 100.

CPI

(Cost of Current Year Market Basket / Cost of Base Year Market Basket) x 100.

Inflation Rate

(Current CPI - Past CPI) / Past CPI x 100.

Labor Force

employed + unemployed workers.

Labor Force Participation Rate

Labor Force / Population x 100.

Unemployment Rate

Number of Unemployed / Labor Force x 100.

Real Interest Rate

Nominal Interest Rate – Inflation.

Marginal Propensity to Consume (MPC)

∆ Spending / ∆ Disposable Income.

Marginal Propensity to Save (MPS)

∆ Savings / ∆ Disposable Income.

Spending Multiplier

1 / MPS.

Tax Multiplier

MPC / MPS

Money Multiplier

1 / Reserve Requirement.