AP MAC EQUATIONS

Comparative advantage input:

A=A/B

Output:

A=B/A

Output expenditure model=

C+Ig+G+Xn

UR=

(Unemployed/Labor Force) x 100

Labor force=

Unemployed+employed

LFPR=

(labor force/working age civilian population) x 100

Natural rate of unemployment=

Frictional + structural unemployment→Cyclical unemployment is 0

Nominal GDP=

Current year good x current year prices

RGDP=

(nGDP/GDP deflator) x 100

GDP deflator=

(Nominal/real) x 100

RGDP

(Nominal/deflator) x100

CPI=

(Current year value/base year value) x 100

Calculating inflation =

(New-old/Old) x 100

MPC=

Change in consumption/Change in income

MPS=

Change in savings/Change in income

MPS+MPC=

1

Spending multiplier=

1/MPS

Tax multiplier=

-MPC/MPS

Money multiplier=

1/RR

Money multiplier x Excess reserves=

New money, loans and deposits

Quantity theory of money:

MV=PY

Y-

realoutput

PY=

nominal GDP

RIR=

Nominal-inflation rate

M0=

bank reserves and currency (cash and coins)

M1=

Currency + coins + checking + travelers

M2=

M1 +savings+ Money market