Chapter 23 of the Mankiw Principles of Economics textbook is titled “Measuring a Nation’s Income”.

This
chapter covers the various measures of a country’s economy, including Gross Domestic Product (GDP), Gross
National Product (GNP), and Net National Product (NNP). Here are some of the formulas from this chapter:
GDP (Expenditure approach): GDP = C + I + G + (X – M)
GDP (Income approach): GDP = wages + rent + interest + profit
Real GDP: Real GDP = (Nominal GDP / GDP Deflator) x 100
GDP Deflator: GDP Deflator = (Nominal GDP / Real GDP) x 100

Net National Product (NNP): NNP = GDP – depreciation

National Income (NI): NI = NNP – indirect taxes + subsidies
Personal Income (PI): PI = NI – undistributed corporate profits – social security contributions + transfer
payments

Disposable Income (DI): DI = PI – personal taxes

Additionally, some other formulas related to the concepts discussed in this chapter are:
Net Investment: Net Investment = Gross Investment – Depreciation
Gross National Product (GNP): GNP = GDP + income earned by citizens abroad – income earned by foreigners
domestically

National Saving: National Saving = Y – C – G, where Y is national income

Private Saving: Private Saving = Y – T – C, where T is taxes
Public Saving: Public Saving = T – G

Chapter 24 of the Mankiw Principles of Economics textbook is titled “Measuring the Cost of Living”. This
chapter covers the concept of inflation and how it is measured, as well as the different types of price indexes.
Here are some of the formulas from this chapter:
Inflation rate: Inflation rate = ((Price index in year 2 – Price index in year 1) / Price index in year 1) x 100
Consumer Price Index (CPI): CPI = (Cost of market basket in current year / Cost of market basket in base year) x
100
GDP Deflator: GDP Deflator = (Nominal GDP / Real GDP) x 100
Real Interest Rate: Real interest rate = Nominal interest rate – Inflation rate
Additionally, some other formulas related to the concepts discussed in this chapter are:
Nominal Interest Rate: Nominal interest rate = Real interest rate + Inflation rate
Real Wage: Real wage = Nominal wage / Price level
Indexed Payments: Indexed payments = (Payment in the current year / Price index in the current year) x Price
index in the year the payment was agreed upon

Chapter 25 of the Mankiw Principles of Economics textbook is titled “Production and Growth”. This chapter
covers the factors that contribute to economic growth, including physical capital, human capital, and
technology, as well as the different models used to analyze economic growth. Here are some of the formulas
from this chapter:
Production function: Y = A x F(K,L,H,N), where Y is output, K is physical capital, L is labor, H is human capital, N
is natural resources, A is the level of technology, and F is the production function
Marginal Product of Labor (MPL): MPL = (Change in output / Change in labor)
Marginal Product of Capital (MPK): MPK = (Change in output / Change in capital)
Total Factor Productivity (TFP): TFP = (Output / ((K^a) x (H^b) x (N^c)))
Growth rate of Output: Growth rate of Output = Growth rate of Capital + Growth rate of Labor + Growth rate
of TFP
Additionally, some other formulas related to the concepts discussed in this chapter are:
Solow Growth Model: Y = F(K,AL), where Y is output, K is physical capital, A is the level of technology, and L is
labor
Steady State: Y = F(Kss,AL), where Kss is the steady state level of capital
Break-even Investment: Break-even investment = (Depreciation rate + Population growth rate + Technological
progress rate) x Steady state capital stock

Chapter 26 of the Mankiw Principles of Economics textbook is titled “Saving, Investment, and the Financial
System”. This chapter covers the role of financial markets in the economy, as well as how saving and
investment decisions are made. Here are some of the formulas from this chapter:
Investment: Investment = Saving
National Saving: National Saving = Y – C – G, where Y is national income, C is consumption, and G is
government spending
Private Saving: Private Saving = Y – T – C, where T is taxes

Public Saving: Public Saving = T – G

Loanable Funds Market: S = I, where S is saving and I is investment
Real Interest Rate: Real interest rate = Nominal interest rate – Inflation rate
Present Value: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the interest rate,
and n is the number of years
Net Present Value (NPV): NPV = (Present value of expected cash inflows) – (Present value of expected cash
outflows)
Rule of 70: Number of years to double = 70 / Annual growth rate

Additionally, some other formulas related to the concepts discussed in this chapter are:
Bond Price: Bond price = (Coupon payment / (1 + r)^1) + (Coupon payment / (1 + r)^2) + … + (Coupon payment
+ Face value / (1 + r)^n)
Yield to Maturity: Yield to maturity = (Coupon payment + (Face value – Bond price) / Number of years to
maturity) / ((Face value + Bond price) / 2)
Stock Price: Stock price = Dividend / (r – g), where r is the required rate of return and g is the growth rate of
dividends

Chapter 27 of the Mankiw Principles of Economics textbook is titled “The Basic Tools of Finance”. This chapter
covers the fundamental concepts of finance, including present value, future value, and risk and return. Here
are some of the formulas from this chapter:
Present Value: PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the interest rate,
and n is the number of years
Future Value: FV = PV x (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate,
and n is the number of years
Net Present Value (NPV): NPV = (Present value of expected cash inflows) – (Present value of expected cash
outflows)
Internal Rate of Return (IRR): The IRR is the discount rate that makes the net present value of an investment
equal to zero

Risk Premium: Risk premium = Expected return – Risk-free rate

Beta: Beta measures the sensitivity of an asset’s return to the market return
Capital Asset Pricing Model (CAPM): Expected return = Risk-free rate + Beta x (Market risk premium)
Efficient Market Hypothesis (EMH): The EMH states that asset prices fully reflect all available information
Additionally, some other formulas related to the concepts discussed in this chapter are:

Sharpe Ratio: Sharpe ratio = (Expected portfolio return – Risk-free rate) / Portfolio standard deviation
Portfolio Return: Portfolio return = (Weight of asset 1 x Return of asset 1) + (Weight of asset 2 x Return of
asset 2) + … + (Weight of asset n x Return of asset n)
Portfolio Variance: Portfolio variance = (Weight of asset 1)^2 x Variance of asset 1 + (Weight of asset 2)^2 x
Variance of asset 2 + … + (Weight of asset n)^2 x Variance of asset n + 2 x (Weight of asset 1) x (Weight of
asset 2) x Covariance between asset 1 and asset 2 + … + 2 x (Weight of asset n-1) x (Weight of asset n) x
Covariance between asset n-1 and asset n
Capital Budgeting: Capital budgeting involves calculating the NPV or IRR of a potential investment in order to
determine whether or not to pursue the investment

Chapter 28 of the Mankiw Principles of Economics textbook is titled “Unemployment”. This chapter covers the
different types of unemployment, their causes, and their effects on the economy. Here are some of the
formulas from this chapter:
Unemployment Rate: Unemployment rate = (Number of unemployed / Labor force) x 100
Labor Force Participation Rate: Labor force participation rate = (Labor force / Working-age population) x 100

Natural Rate of Unemployment: The natural rate of unemployment is the rate of unemployment that exists
when the labor market is in equilibrium, with no cyclical unemployment. It is composed of frictional and
structural unemployment.
Okun’s Law: Okun’s law states that a 1% increase in the unemployment rate is associated with a 2% decrease
in real GDP.
Phillips Curve: The Phillips curve shows the inverse relationship between unemployment and inflation in the
short run.
Natural Rate Hypothesis: The natural rate hypothesis states that in the long run, changes in the
unemployment rate are primarily determined by changes in the natural rate of unemployment.
Additionally, some other formulas related to the concepts discussed in this chapter are:
Gross Domestic Product (GDP): GDP = C + I + G + (X – M), where C is consumption, I is investment, G is
government spending, X is exports, and M is imports

Labor Productivity: Labor productivity = Output per worker

Capital Productivity: Capital productivity = Output per unit of capital
Solow Growth Model: The Solow growth model is a theoretical model of economic growth that focuses on the
role of capital accumulation, technological progress, and population growth in driving long-run economic
growth.
Chapter 29 of the Mankiw Principles of Economics textbook is titled “The Monetary System”. This chapter
covers the role of money, the functions of the central bank, and the effects of monetary policy on the
economy. Here are some of the formulas from this chapter:
Money Multiplier: Money multiplier = 1 / Reserve requirement ratio
Money Supply: Money supply = Currency + Deposits x Money multiplier
Velocity of Money: Velocity of money = Nominal GDP / Money supply

Quantity Theory of Money: MV = PY, where M is the money supply, V is the velocity of money, P is the price
level, and Y is real output.
Fisher Effect: The Fisher effect states that the nominal interest rate is equal to the real interest rate plus the
expected inflation rate.

Taylor Rule: The Taylor rule is a monetary policy rule that specifies how a central bank should adjust interest
rates in response to changes in inflation and the output gap.
Phillips Curve: The Phillips curve shows the inverse relationship between unemployment and inflation in the
short run.
Taylor Phillips Curve: The Taylor Phillips curve incorporates the idea that the Phillips curve can shift due to
changes in inflation expectations.
Additionally, some other formulas related to the concepts discussed in this chapter are:
Nominal Interest Rate: Nominal interest rate = Real interest rate + Expected inflation rate
Real Interest Rate: Real interest rate = Nominal interest rate – Expected inflation rate
Inflation Rate: Inflation rate = ((Price index in current period – Price index in previous period) / Price index in
previous period) x 100
Money Demand: Money demand = k x (Nominal GDP / Price level), where k is the proportion of nominal GDP
that people want to hold in the form of money.
Taylor Rule: Interest rate = Neutral rate + 0.5 x Inflation gap + 0.5 x Output gap

Chapter 30 of the Mankiw Principles of Economics textbook is titled “Money Growth and Inflation”. This
chapter covers the relationship between money growth and inflation, the costs of inflation, and the ways to
reduce inflation. Here are some of the formulas from this chapter:
Quantity Theory of Money: MV = PY, where M is the money supply, V is the velocity of money, P is the price
level, and Y is real output.
Inflation Rate: Inflation rate = ((Price index in current period – Price index in previous period) / Price index in
previous period) x 100
Fisher Effect: The Fisher effect states that the nominal interest rate is equal to the real interest rate plus the
expected inflation rate.
Real Interest Rate: Real interest rate = Nominal interest rate – Expected inflation rate
Costs of Inflation: Costs of inflation include shoe-leather costs, menu costs, and increased variability of relative
prices.
Phillips Curve: The Phillips curve shows the inverse relationship between unemployment and inflation in the
short run.
Short-Run Phillips Curve: The short-run Phillips curve is a curve that shows the negative relationship between
unemployment and inflation in the short run.
Long-Run Phillips Curve: The long-run Phillips curve is a vertical line at the natural rate of unemployment,
indicating that in the long run, changes in the inflation rate have no effect on the unemployment rate.
Additionally, some other formulas related to the concepts discussed in this chapter are:
Nominal GDP: Nominal GDP = Price level x Real GDP
Real GDP: Real GDP = Nominal GDP / Price level
Money Demand: Money demand = k x (Nominal GDP / Price level), where k is the proportion of nominal GDP
that people want to hold in the form of money.
Money Supply: Money supply = Currency + Deposits x Money multiplier
Velocity of Money: Velocity of money = Nominal GDP / Money supply

Chapter 31 of the Mankiw Principles of Economics textbook is titled “Open-Economy Macroeconomics”. This
chapter covers the concepts of international trade, exchange rates, and the balance of payments. Here are
some of the formulas from this chapter:
Net Exports: Net exports = Exports – Imports
Trade Balance: Trade balance = Net exports – Net income received from abroad + Net unilateral transfers from
abroad
Current Account Balance: Current account balance = Trade balance + Net income received from abroad + Net
unilateral transfers from abroad
Capital Account Balance: Capital account balance = Capital inflows – Capital outflows
Balance of Payments: Balance of payments = Current account balance + Capital account balance

Exchange Rate: Exchange rate = Domestic currency price of foreign currency

Appreciation: Appreciation is an increase in the value of a currency relative to other currencies.
Depreciation: Depreciation is a decrease in the value of a currency relative to other currencies.
Purchasing Power Parity: Purchasing power parity states that the exchange rate between two currencies
should equal the ratio of the price level in one country to the price level in another country.
Real Exchange Rate: Real exchange rate = (Nominal exchange rate x Domestic price level) / Foreign price level
Interest Rate Parity: Interest rate parity states that the difference between the interest rate in one country
and the interest rate in another country equals the expected appreciation or depreciation of the exchange
rate.
Additionally, some other formulas related to the concepts discussed in this chapter are:
Gross Domestic Product (GDP): GDP = Consumption + Investment + Government spending + Net exports
Nominal GDP: Nominal GDP = Price level x Real GDP

Real GDP: Real GDP = Nominal GDP / Price level

Exchange Rate Appreciation Rate: Exchange rate appreciation rate = ((New exchange rate – Old exchange rate)
/ Old exchange rate) x 100
Exchange Rate Depreciation Rate: Exchange rate depreciation rate = ((Old exchange rate – New exchange rate)
/ Old exchange rate) x 100.