AP Macro Equations to Know
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10 Terms
1
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Spending Multiplier
1 / (1 - MPC)
2
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Money Multiplier
1 / Reserve Requirement Ratio
3
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Real Interest Rate
Nominal Interest Rate - Inflation Rate
4
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Unemployment Rate
(Unemployed/ Labor Force) x 100
5
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Consumer Price Index
Original Cost of a Basket of Items/ Current Cost of a Basket of Items
6
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Inflation Rate
(New CPI - Old CPI) / Old CPI x 100
7
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GDP Deflator
Nominal GDP/ Real GDP x 100
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GDP
Consumption + Investment + Government Spending + Net Exports
9
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Natural Rate of Unemployment
Frictional Unemployment + Structural Unemployment
10
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Real GDP
(Nominal GDP/ GDP Deflator) x 100
Note 
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