AP Macroecnomics Unit 5: Long-Run Consequences of Stabilization Policies - Formulas

Formula for the Monetary Equation of Exchange

MV = PQ (or Y)

(Money Supply x Velocity of Money = Average Price Level x Real GDP/Output)

Formula for the Budget Balance

Tax Revenue - Government Spending

Formula for the Government Debt

Deficit_{Year 1} + Deficit_{Year 2} + …

Formula for Debt at the End of the Year

Amount of Loan + Amount of Interest

Formula for Public Savings/Savings by Government

Tax Revenue - Government Spending - Transfer Payments

Formula for Economic Growth Rate

(GDP₂ - GDP₁)/GDP₁