Macroeconomics Equations Cheat Sheet

Equations Cheat Sheet Expenditures Approach: GDP = Consumption Consumption (C) + Gross Private Domestic Investment (Ig) + Government Purchases (G) + Net Exports (X n) Income Approach: GDP = National Income - Net oreign actor Income + !tatistical Discrepanc" + Consumption o# ixe$ Capital (Depreciation) National Income (NI) = %ages + &ents + Interest + Proprietors' Income + Corporate Prots + axes on Pro$uction an$ Imports* National Income (NI) = NDP - !tatistical Discrepanc" + Net oreign actor Income* NDP = GDP - Depreciation Personal Income (PI) = NI - axes on Pro$uction an$ Imports - !ocial !ecurit" Contriutions - Corporate Income axes - ,n$istriute$ Corporate Prots + rans#er Pa"ments Disposable Income (DI)  = PI - Personal axes Price Index in Year

Y    

price of market basket in year Y  price of same market basket in base year

× 100



nominal GDP in year Y  real GDP in year Y 

!eal "DP 

nominal GDP price index (in hundredths)

!ule o# $%: pprox* . o# /ears to Doule =

&nemplo'ment !ate 

unemployed labor force

70 annual percentage rate of growth

× 100

"DP "ap  actual GDP - potential GDP Consumer Price Index (CPI) 

price of the most recent market basket in a particular year price estimate of the same market basket in 1!"#1!$

×

100

!eal Income 

nominal income price index (in hundredths)

 Chane in !eal Income * 0 Change in Nominal Income - 0 Change in Price 1evel Nominal Interest !ate = &eal Interest &ate + In2ation Premium (Expecte$ In2ation) Sa+in (S)  Disposale Disposale Income (DI) - Consumption (C) A+erae Propensit' to Consume (APC) 

%onsumption %onsumption (% ) Disposable &ncome (D&)

'aing (') Disposable &ncome (D&)

A+erae Propensit' to Sa+e (APS)  APC , APS  -

.arinal Propensit' Propensit' to Consume (.PC) 

.arinal Propensit' Propensit' to Sa+e (.PS) 

%hange in %onsumption %hange in &ncome

%hange in 'aing %hange in &ncome

.PC , .PS  .ultiplier 

%hange in real GDP &nitial %hange in 'pending

 =

1 )P'  =

1 1 −P%

Equilibrium "DP (Pri+ate Closed Econom')  Consumption (C) + Gross Private Domestic Investment (I g) Equilibrium "DP (Pri+ate /pen Econom')   C + Ig + Net Exports (X n) Equilibrium "DP (Public /pen Econom')   C + Ig + Xn + Government Purchases (G) Per0&nit Production Cost 

Producti+it' 

total output total input

total input cost units of output