AP Macroeconomics : Formulas

All the important formulas to know for the AP Macro semester + final exam.

GDP expenditure approach

C + I + G + (x - M) (consumer spending + business/investment spending + government spending + exports - imports)

GDP income approach

W + r + i + P (wages + rents + interest + profits)

RGDP

(Nominal GDP/Price Index) * 100

Price Index (CPI)

(Value of market basket to compare/Value of market basket from base year) * 100

Rate of Change

((Year 2 - Year 1)/Year 1) * 100

Unemployment Rate

(Unemployed/(employed + unemployed; aka labor force) ) * 100

Labor Force Participation Rate

((Employed + Unemployed)/Noninstitutionalized Adult Population) * 100

Nominal

Real + Expected Rate of Inflation

Real

Nominal - Expected Rate of Inflation

MPC

Change in consumption/change in disposable income

MPS

Change in savings/change in disposable income

Simplified Spending Multiplier (SSI)

1/(1-MPC) or 1/MPS

Tax Multiplier

MPC/MPS

Balanced Budget Multiplier

1

Change in GDP

A multiplier (simple, tax, or balanced budget) * initial change in spending

Present Value

$/(1+r)

Future Value

$(1+r)

Money Multiplier

1/rrr (required reserve ratio)

Change in Money Supply

Money Multiplier * Excess Reserves

Change in Demand Deposits

Money Multiplier * Initial Deposit