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45 Cards in this Set

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CPI
(given year)
(cost-market basket in given yr)
-------------------------------
(cost-market basket in base yr)

X 100
Inflation
Cpi New yr
-----------
Cpi base yr
Aggregate demand
Y=c+I+G+(E-IM)
GDP
Y=c+I+G+(E-IM)

Or

NI= National Income
Real Salery
Nominal/CPI x 100
Consumption Function
C=a+b(DI)
MPC
Change in consumption
/
Change in Disposable income
DI
GDP-taxes + transfer payments
Nominal rate of interest
Real interest + Expected Inflation
Real GDP
Nominal GDP / GDP deflater

x 100
growth rate of Potential GDP
Growth rate of labor force
+
Growth rate of labor productivity
Multiplier
(Fixed Taxes)
1 / (1-mpc)
total profit
total revenue - total cost
productivity
output / hours worked
interest rate
change in Price
---------------
price
money supply
M = c+d
RESERVE RATIO
RESERVES
-----------
DEPOSITS
Multiplier
(variable Taxes)
Change in GDP
---------------------
change in expenditure
Tax Rate
Change in taxes
------------------
change in GDP
Contractionary fiscal tools
(3 main things)
-Cutting government spending
-raising taxes
-reduces inflation
Expansionary fiscal policy
(4 main things)
- increase government spending
- decrease taxes
- Increase transfer payments
- reduces unemployment
Required reserves
(Loan) x (required reserve rate)
Change in money supply
(1/reserve ratio) x (change in reserves)
reserve ratio
reserves
---------
deposits
Velocity
Y x p
-----
m
Value of transfers (p)
m x v
------
y
Gdp ( in relation to Money supply)
m x v
------
p
Money supply ( M1 type)
y x p
-----
v
Changing Velocity formula

(bonus #1 exam 2)
(%change in v) x (% change in m)

=

(%change in p) x (% change in y)
What happens to unemployment when GDP goes down?
unemployment goes up
Unemployment rate
unemployment
------------
Labor Force
total out put (employment)
employment x labor productivity
real salery
nominal salary
---------------
cpi

x 100
GDP growth rate
Growth of population
---------------------
Growth of Labor production
Economic growth
GDP(1+growth rate)^yrs
GDP / capita
GDP
---------
population
Growth rate of potential GDP
Growth rate of labor input
+
Growth rate of productivity
Real GDP
Nominal GDP
------------
GDP Deflater

x 100
Real spending
nominal spending
----------------
price index

x 100
Income Expenditure Graph
(2 key points)
-Expenditure increases because wealth increases
-Expenditure decreases because wealth decreases
what happens to wealth when prices goes up
wealth goes down
Savings
(y - t) - c
or

(DI) - c
tax multiplier
-b
-------
1-b(1-t)
Recessionary gap
(3 key points)
-producers push wages down
-excess supply of workers
- AS shifts outword
Inflationary gap
(2 key points)
- workers push wages up
- AS shifts inward
(As= aggregate supply)