IB Economics SL Formulas to Know

Percent change =

new-old/old x 100

Price elasticity of demand =

% change in quantity demanded / % change in price

Price elasticity of supply =

% change in quantity supplied / % change in price

GDP and Aggregate Demand =

C + I + G + (X-M)

Real GDP =

Nominal GDP/GDP Deflator x 100

GDP per capita =

real GDP/population

GDP deflator =

Nominal GDP/Real GDP x 100

Economic growth rate =

(GDP2 - GDP1)/(GDP1)

Inflation rate =

(Price index in year 2 - price index in year 1)/(Price index in year 1) x 100

Consumer Price Index (CPI)

A measure of the overall cost of a basket of goods bought by a typical consumer. Add up the prices of all goods. Remember to multiply quantities.

Unemployment rate =

unemployed/labor force x 100

CPI =

(Price of basket of goods and services in current year/price of basket in base year) x 100

Inflation =

(CPI year 2 - CPI year 1) / (CPI year 1) x 100

-must be consecutive years

MPC =

change in consumption/change in disposable income

Multiplier =

1/(1-MPC) or 1/MPS

MPS =

change in saving/change in disposable income

MPC + MPS =

1 or 100%

Tax multiplier =

-MPC/MPS

consumer/producer surplus

½ base x height