# Shared Flashcard Set

## Details

Macroeconomics Formulas
Formulas and Definitions
23
Economics
06/25/2010

Term
 Slope of Line
Definition
 Change in vertical distance / change in horizontal distance
Term
 PPF Production Possibilities Frontier
Definition
 Line represents boundary between inefficient use of resources (bottom left side) and unattainable goals (top right side)
Term
 Disposable income
Definition
 Gross income - Taxes + Transfer payments
Term
 Net Taxes
Definition
 Taxes - transfer payments
Term
 GDP Gross Domestic Product
Definition
 Disposable income + net taxes
Term
 GDP via Expenditures
Definition
 C + I + G + (X-M)Consumer spending + Investments + Gov't purchases + (Exports less imports)
Term
 Net Domestic Product
Definition
 GDP - depreciation
Term
 Real GDP
Definition
 Actual final goods and services adjusted for inflation
Term
 Nominal GDP
Definition
 Final goods and services using prices at time of production
Term
 GDP Price Index
Definition
 Nominal GDP / Real GDP x 100Average price of all goods and services
Term
 Rate of percentage
Definition
 Current price less base price, then... Answer / current price    If figuring the CPI, would use this formula and multiply result by 100
Term
 Leakage or injection into economy
Definition
 S + NT + M = I + G + X Savings + Net Taxes + Imports = Investments + Gov't Spending + Exports   Savings, Net Taxes and Imports are Leakages   Investments, Gov't Purchases and Exports are Injections
Term
 Unemployment rate
Definition
 number of unemployed / labor force
Term
 Labor force
Definition
 Number of people working and looking for work
Term
 MPC
Definition
 How much more would you consume, given a certain increase in income?change in consumption / change in income
Term
 MPS
Definition
 How much more would you save, given a certain increase in income?change in saving / change in income
Term
 Simple Spending Multiplier
Definition
 How much of an increase in spending is needed to generate a desired effect?1 / MPS = 1 / (1-MPC) answer is the multiplier to use to calc effect
Term
 Real GDP demanded
Definition
 Change in GDP x 1 / (1-MPC) or(-MPC x change in Net Taxes) x 1 / (1-MPC)Change in Net Taxes x -MPC / (1-MPC)
Term
 Assets
Definition
 Liabilities + Net Worth
Term
 Simple Money Multiplier
Definition
 Measures how well money is circulating in the economyMoney Supply x Velocity=Price Level x Year GDP
Term
 Velocity
Definition
 Average number of times a dollar is used in a yearPrice Level x Y GDP / Money Supply
Term
 Total Spending
Definition
 Money x Velocity
Term
 Total Receipts
Definition
 Price Level x Y GDP
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