# Shared Flashcard Set

## Details

Macroeconoics Formulas
basic macro formulas for kstate final
25
Economics
12/13/2011

Term
 GDP Inflator
Definition
 Nominal GDP / Real GDP
Term
 Rate of Inflation
Definition
 (New CPI - Old CPI) / Old CPI
Term
 Convert wage from present to past
Definition
 (Old CPI - Current CPI) x current wage
Term
 convert wage from past to present
Definition
 (Current CPI - Old CPI) x old wage
Term
 unemployment rate
Definition
 # of unemployed / labor force
Term
 labor force
Definition
 All employed + those actively seeking employment
Term
 natural rate of unemployment
Definition
 structural + frictional unemployment. "best we can do" currently 4.8%
Term
 okuns law
Definition
 for every 1% gap between actual and natural unemployment, correlated 2% decrease in real GDP growth.
Term
 real interest rate
Definition
 nominal rate - inflation rate
Term
 nominal wage =
Definition
 real wage x price level
Term
 real wage =
Definition
 nominal wage / price level
Term
 nominal GDP =
Definition
 Price level x Real GDP
Term
 Rule of 72
Definition
 72 / Growth Rate (the amount of time it takes for a population to double)
Term
 Keynes
Definition
 C + I + G = Y
Term
 multipler effect
Definition
 1 / MPC (marginal propensity consume)or1 / MPS
Term
 MPC (marginal propensity to consume)
Definition
 change Consumption / change Income
Term
 M =
Definition
 change Income (or GDP) / change Spending
Term
 Multiplier effect
Definition
 1 / (1-MPC) or 1 / MPS
Term
 MPC + MPS = ?
Definition
 ? = 1
Term
 INCOME or Y or OUTPUT = ?
Definition
 C + I + G + NX = Y
Term
 Y(0) =
Definition
 Y - T = disposable income
Term
 unemployment rate =
Definition
 "natural" rate + cyclical unemployment
Term
 equilibrium price
Definition
 Quanity Supplied (Qs) = Quantity Demanded (Qd)
Term
 owners equity
Definition
 Assets = liabilities
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