AP Econ Equations
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Last updated 4:29 PM on 1/9/23
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23 Terms
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Percent Change in GDP
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GDP (Y)
Consumer spending (C) + Business Investment (I) + Government Spending (G) + (Exports (X) - Imports (M))
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GDP Deflator
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Nominal GDP
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Unemployment Rate
(# of unemployed / # in labor force) x 100
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Labor Force Participation Rate
people in the labor force/ total working age population
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CPI
**(Price of market basket / Price of market basket in base year) x 100**
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Aggregate Demand (AD)
= GDP = C + I + G + Xn
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Marginal Propensity to Consume (MPC)
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Marginal Propensity to Save (MPS)
(2 equations)
(2 equations)
1 - MPC
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Spending Multiplier
(2 equations)
(2 equations)
1/MPS
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Total Change in GDP (2 equations)
Tax multiplier x Initial change in taxes
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Tax Multiplier (2 equations)
1 - Spending Multiplier
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Money Multiplier
1/reserve ratio
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National Savings
(Y - C - T) + (T - G)
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Private Savings
GDP (Y) - C - Taxes (T)
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Public Savings
Taxes (T) - G
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Quantity Theory of Money
Money Supply (M) x Velocity of Money (V) = Price level (P) x Quantity of Output (Y)
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Balance of Payments
Current Account (CA) + Financial Account (CFA) = 0
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financial account surplus
inflow > outflow
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financial account deficit
inflow < outflow
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Federal Budget deficit
Taxes < Budget
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Federal Budget Surplus
Taxes > Budget