AP Macro Formula Sheet Flashcards

Flashcards for AP Macroeconomics formulas and definitions.

GDP

Total value of all final goods and services produced by an economy in a given year.

GDP Formula

GDP = C + I + G + (X-M) or C + I + G + Xn

What is NOT counted in GDP?

Illegal activities, government transfer payments, sale of used goods, financial payments.

GDP (Alternative Names)

Output, or Y

GDP per Capita

GDP / population

Nominal GDP

GDP in current dollars

GDP Price Index (Deflator) Formula

(Nominal GDP / Real GDP) x 100

Real GDP Formula

Nominal GDP / (Price index (deflator) in hundredths)

Price Index Formula

(Market basket in a specific year / Market basket in a base year) x 100

CPI Formula

(Recent market basket in a specific year / Market basket in a base year) x 100

Rate of Inflation Formula

(Current CPI - Previous CPI) / Previous CPI x 100

Marginal Propensity to Consume (MPC) Formula

Change in Consumption / Change in Disposable Income (AC/ADI)

Marginal Propensity to Save (MPS) Formula

Change in Savings / Change in Disposable Income (AS/ADI) or 1 - MPC

MPC + MPS

1

Average Propensity to Consume (APC) Formula

Consumption / Disposable Income (C/DI)

Average Propensity to Save (APS) Formula

Savings / Disposable Income (S/DI)

Simple Spending Multiplier Formula

1 / (1 - MPC) or 1 / MPS

Government Multiplier Formula

1 / (1 - MPC) or 1 / MPS