AP macro formulas

Unemployment Rate

(Unemployed / Labor Force) x 100

Labor Force

Unemployed + Employed

Labor Force Participation Rate

(Labor Force / Working Age Civilian Population) x 100

Calculating a GDP Deflator

(Nominal / Real) x 100

Nominal To Real

(Nominal / Deflator) x 100

CPI Formula

(Current Year Value / Base Year Value) x 100

Calculating Inflation between years

(New CPI - Old CPI) / Old CPI x 100

Spending Multiplier

1 / MPS

Tax Multiplier

-MPC / MPS

M0 (Monetary Base)

Bank Reserves and Currency

M1 (Money)

Currency, Checkable Deposits, and Savings Deposits

M2 (Money and Near Money)

M1 + Small Time Deposits & Money Market

The Fisher Formula

i - pi = r

i (Nominal Interest Rate)

The stated interest rate unadjusted for inflation.

r (Real Interest Rate)

Nominal Interest Rate adjusted for inflation.

pi (Inflation Rate)

The rate at which the general level of prices for goods and services is rising.

Money Multiplier

1 / reserve ratio

Open Market Operations

Buying or selling government bonds to influence money supply.

Discount Rate

Interest rate the central bank charges banks.

Reserve Requirement

The percentage of checkable deposits banks must hold.

Quantity Theory of Money

MV = PY, where M is money supply, V is velocity, P is price level, and Y is output.