CALCULATIONS

Real interest rate

nominal interest rate - inflation rate

Ped

(Qnew-Qold/Qold) / (Pnew-Pold/Pold)

Yed

(Qnew-Qold/Qold) / (Ynew-Yold/Yold)

Pes

(Qsnew-Qsold/Qsold) / (Pnew-Pold/Pold)

Total revenue

price x quantity

GDP

C + I + G + (X-M)

Amount of spending without tax

total spending / (100 + indirect tax) x 100

GNI

GDP + net income from abroad

Gini

A / A+B

Pnet

Ptax - tax per unit

rGDP

(nominal GDP / GDP deflator) x 100

Price index

(value of basket in a specific year / value of same basket in base year) x 100

Amount of indirect tax

spending with tax - spending without tax

Total average tax rate

Average indirect tax rate + Average income tax rate

GDP deflator

(nominal GDP / real GDP) x 100

BoP

Current Account + Capital Account + Financial Account = 0

GDP/GNI per capita

GDP/GNI / population

real GDP/GNI per capita

real GDP or GNI / population

Total Fixed Cost

Total Cost - Total Variable Costs OR Average Fixed Costs x Quantity

Total Cost (TC)

Total Fixed Costs + Total Variable Costs OR Average Costs x Quantity

economic growth

(rGDPnew - rGDPold / rGDPold) x 100

Average Cost (AC)

Total Cost/Quantity OR Average Fixed Costs + Average Variable Costs

Marginal Cost (MC)

delta Total Cost / delta Quantity

Total Variable Costs

Total Cost - Total Fixed Costs OR Average Variable Costs x Quantity

Average Product (AP)

Total Product / Quantity of Labor

Marginal Product (MP)

delta Total Product / delta Quantity of Labor

Average Revenue (AR)

TR / Quantity sold

Marginal Revenue (MR)

delta Total Revenue / delta Quantity

Profit

Total Revenue - Total Cost OR total revenue - (sum of explicit + sum of implicit costs)

Supernormal Profit

Average Revenue > Average Cost

Subnormal Profit

Average Revenue < Average Cost

Normal Profit / break-even

Average Cost = Average Revenue

Profit Maximization

Marginal Cost = Marginal Revenue

Revenue Maximization

Marginal Revenue = 0

Utility Maximization

Marginal Utility = 0

Allocative Efficiency

Demand = Supply, MSB = MSC, P = MC

Productive Efficiency

Minimum Point on Average Cost Curve, AC = MC

Social Surplus

Producer Surplus + Consumer Surplus

Social Cost

Private Costs + External Costs

Social Benefit

Private Benefit + External Benefit

CS/PS

(base x height) / 2

Consumer surplus

1/2 x Qe x (max price - Pe)

Marginal Utility

delta Total Utility / delta Quantity

Average Utility

Total Utility / Quantity

Profit Maximization in Labor Market

Marginal Revenue Product = Marginal Cost of Labor

Unemployment rate

(number of unemployed / labour force) x 100

Keynes multiplier sum

1 / (1 - MPC) OR 1 / (MPS + MPT + MPM)

Keynesian multiplier

delta rGDP / initial delta in expenditure

Keynesian multiplier with marginal values

MPC + MPS + MPT + MPM = 1

Money multiplier

1 / RRR e.g. 1/0.1 = 10

Tax multiplier

(MPC / (1 - MPC)) applied as negative when tax rises

Balanced budget multiplier

1 (equal rise in G and T raises GDP by same amount)

Marshall-Lerner Condition

PED(exports) + PED(imports) > 1

Nominal GDP

Quantity of Goods and Services Produced x Current Prices

GDP per capita

GDP / Total Population

Inflation rate

((CPI new - CPI old) / CPI old) x 100

CPI

(cost of basket current year / cost of basket base year) x 100

% change in price index

(price index new - price index old / price index old) x 100

Comparative advantage opp cost

opp cost of Good X = (Good Y Sacrificed) / (Good X Produced)

Exchange rate cross rate

if 1 EUR = 1.16 USD then 1 USD = 1/1.16 = 0.86 EUR

How to calculate indirect tax (ad valorem)

percent tax x price value x Q

How to calculate indirect tax (specific tax)

Step 1: identify tax per unit. Step 2: identify quantity traded after tax. Step 3: Indirect tax revenue = tax per unit x quantity

How to calculate direct tax (income tax)

Step 1: identify tax brackets. Step 2: break income into bracket portions. Step 3: multiply each portion by its tax rate. Step 4: add all values = total direct tax paid. Step 5: average tax rate = (total tax paid / income) x 100

PR (before subsidy / tax / PC / PF)

P x Q

CE (before subsidy / tax / PC / PF)

P x Q

PR (after subsidy)

Pp x Qs

CE (after subsidy)

Pc x Qs

(subsidy) GE

(Pp - Pc) x Qs

(subsidy) WL

((Pp - Pc) x (Qs - Q)) / 2

(subsidy) CB

(Pe - Pc) x Qs

(subsidy) PB

(Pp - Pe) x Qs

PR (after tax)

Pnet x Qs

CE (after tax)

Ptax x Qs

(tax) GR

(Ptax - Pnet) x Qs

(tax) WL

((Ptax - Pnet) x (Q - Qs)) / 2

(tax) PB

(P - Pnet) x Qs

(tax) CB

(Ptax - P) x Qs

PR (after PC)

Pc x Qs

CE (after PC)

Pc x Qs

(PC) WL

((Pd - Pc) x (Qd - Qs)) / 2

(PC) Shortage

Qd - Qs

PR (after PF)

Pf x Qs

CE (after PF)

Pf x Qd

(PF) PR with govt

Pf x Qd

(PF) GE

(Qs - Qd) x Pf

(PF) WL

((Pf - Ps) x (Q - Qd)) / 2

Quantity of exported goods

Qs - Qd

Revenue from exported goods

(Qs - Qd) x Pw

Domestic producer revenue from exports

Pw x Qs

Domestic consumer expenditure from exports

Pw x Qd

Quantity of imported goods

Qd - Qs

Expenditure on imported goods

(Qd - Qs) x Pw

Before export subsidy: Producer revenue

Pw x Qs

Before export subsidy: Domestic consumer expenditure

Pw x Qd

Before export subsidy: Foreign consumer expenditure

(Qs - Qd) x Pw

Before export subsidy: Producer surplus

(Pw - Pmin) x Qs / 2

Before export subsidy: Consumer surplus

(Pmax - Pw) x Qd / 2

Before export subsidy: Government expenditure

0

After export subsidy: Producer revenue

(Pw + Ssub) x Qs1

After export subsidy: Domestic consumer expenditure

(Pw + Ssub) x Qd1