ap macro formulas

GDP (productivity method)

GDP = (quantity of good 1 x price of good 1) + (quantity of good 2 x price of good 2) + etc

GDP (Aggregate expenditure method)

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

GDP per capita

GDP/population

GDP Deflator

Nominal GDP/Real GDP

Real GDP

(Nominal GDP/GDP deflator) x 100

Real GDP % Change

Nominal GDP % Change - Inflation Rate

% Change in GDP

Year 2 GDP - Year 1 GDP x 100 / Year 1 GDP

Net Exports or current account balance

exports - imports (X - M)

Unemployed

structurally unemployed + frictionally unemployed + cyclically unemployed

Natural Unemployment

structurally unemployed + frictionally unemployed

Labor Force

unemployed + employed

Labor Force Participation Rate

(labor force/population) x 100

Unemployment Rate

(unemployed/labor force) x 100

Hidden Unemployment

discouraged workers + underemployed

Cost of market basket

(quantity of good 1 x price of good 1) + (quantity of good 2 x price of good 2) + (quantity of good 3 x price of good 3), etc.

CPI

(Cost of market basket in a given year/Cost of market basket in base year) x 100

Base year CPI

100

Inflation Rate (using CPI)

[(CPI year 2 - CPI year 1) / CPI Year 1] x 100

Inflation Rate (using GDP deflator)

[(GDP Deflator Yr 2-GDP Deflator Yr 1)/ (GDP Deflator Yr 1] x 100

Inflation Rate (using % change)

Nominal GDP Growth Rate - Real GDP Growth Rate

Finding a price in real terms

(current CPI/historic CPI) x historic price

Marginal Propensity to Consume

change in spending/change in disposable income

Marginal Propensity to Consume (MPC)

1 - MPS

Marginal Propensity to Save (MPS)

1 - MPC

Spending Multiplier

1 / (1-MPC)

Autonomous Change in Aggregate Spending (AAS)

change in government spending

Income Tax Multiplier

-MPC/(1-MPC)

Required reserves (rr)

demand deposits x reserve requirement

Excess reserves (er)

demand deposits - required reserves

Velocity of Money (V)

V = Nominal GDP/Money Supply (MS)

Quantity Equation

MS x V = Nominal GDP

Opportunity Cost

change in y/change in x or simply, y/x

Comparative advantage

nation with lowest opportunity cost

Total Revenue

price (p) x quantity (q)

Exchange Rate

Starting Amount (original currency)/Ending Amount (new currency)