ECON 104: Principles of Macroeconomics Formula Sheet I

GDP and GDP Deflator:

 National Spending Approach: Y = C + I + G + NX; where:
Y: Nominal GDP
C: Consumption
I: Investment
G: Government Spending
NX: Net Exports = Exports – Imports
 Factor Income Approach: Y= Rent + Wages + Profit + Interest
Nominal GDP
 GDP Deflator =
Real GDP
Unemployment and Labor Force:
Labor Force = Unemployed + Employed
Labor Force
Labor Force Participation Rate =
Working Age Population
Inflation:
Inflation:
 Cost of Basket = (Q¿¿ 1) ( P x 1 )+ ( Q2 ) ( Px 2 ) +…(Qn)( P xn )¿ ;
where:
n: Number of good with respect to prices and quantities
Qn : Quantity of good n
Prn: Price of good n in year r
X: year
Cost of Basket x
 CPI = ;
Cost of Basket y
CPI x −CPI y
 Inflation Rate = ; X: given year; Y: base year
CPI y
 Quantity Money Equation = M x V = P x Y; where:
M: Money supply
V: Money velocity
P : Price
Y Real GDP