Notation
a = capital share in national income
a = worker’s bargaining power (Chapter 6)
a = fraction of defaulting borrowers in the credit market (Chapter 10)
b = unemployment insurance payment (Chapter 6)
b = productivity of labor in producing human capital (Chapter 8)
c = individual current consumption
d = depreciation rate
e = matching efficiency (Chapter 6)
em(Q, A) : matching function (Chapter 6)
e = nominal exchange rate (Chapter 16)
f = per worker production function
g = function describing the relationship between current population and future
population in the Malthusian growth model
h = time available to the consumer
i = inflation rate
i
e
= anticipated inflation rate
j = labor market tightness
k = capital per worker
l = leisure
l = land per worker (Chapter 7)
n = labor force growth rate
p = price of housing (Chapter 10)
p
c
= probability of finding work for a consumer
p
f
= probability for a firm of finding a match with a worker
q = price of credit card balances
r = real interest rate
r
∗
= world real interest rate
r
1
= real interest rate at which consumers can lend
r
2
= real interest rate at which consumers can borrow
s = savings rate (Chapters 7 and 8)
t = tax rate (Chapter 5)
t = current lump sum tax paid by the individual (Chapter 9)
t = fraction of early consumers (Chapter 17)
u = unemployment rate
u = time spent producing consumption goods (Chapter 8)
v = vacancy rate
w = real wage
we = lifetime wealth
x = money growth rate
y = individual current income
z = total factor productivity
A = number of active firms
B = bonds issued by the government
C = aggregate consumption
CA = current account surplus
D = government deficit
E = employment
G = government expenditures
GDP = gross domestic product
GNP = gross national product
H = human capital (Chapter 8)
H = quantity of housing held by consumer (Chapter 10)
I = investment
INT = interest paid to the government
K = capital stock
KA = capital account surplus
L = quantity of land (Chapter 7)
L = loan quantity chosen by a good borrower (Chapter 10)
L = real money demand function (Chapter 12)
M = money supply
MC(I) = marginal cost of investment
MB(I) = marginal benefit from investment
MPC = marginal propensity to consume
MP
K
= marginal product of capital
MP
N
= marginal product of labor
MRS
x,y
= marginal rate of substitution of x for y.
MRT
x,y
= marginal rate of transformation of x for y.
MU
c
= marginal utility of consumption
N = employment
NFP = net factor payments
NL = number not in the labor force
NX = net exports
P = price level
P
∗
= foreign price level
PPF = production possibilities frontier
P(Q) = supply curve for searching workers
Q = labor force
R = nominal interest rate
S = aggregate savings
S
p
= private savings
S
g
= government savings
T = total taxes
TOT
a,b
= terms of trade or world price of a in terms of b
TR = aggregate transfers from the government
U = number of unemployed
U = utility function (Chapter 17)
V = present value of profits
W = nominal wage
X = credit card balances, in real terms
Y = aggregate real income
Y
d
= disposable income
Y
T
= trend level of output
p = profits
Notes
• Primes denote future variables, for example C
œ
denotes the future level of aggregate
consumption.
• A superscript  denotes variables for the previous period, for example B

are bonds acquired
in the previous period in Chapter 12.
• A superscript d denotes demand, for example N
d
is labor demand.
• A superscript s denotes supply, for example N
s
is labor supply.
• In Chapters 7 and 8, lower case letters are variables in perworker terms.