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Flashcards in BEC Formulas (Economics) Deck (10):
1

Price Elasticity of Demand

% change in quantity demanded / % change in price

2

Income Elasticity of Demand

% change in quantity demanded / % change in income

3

Cross Elasticity of Demand

% change in quantity demanded for product X / % change in quantity demanded for product Y

4

Price Elasticity of Supply

% change in quantity supplied / % change in price

5

Marginal Propensity to Save

change in savings / change in disposable income

6

Marginal Propensity to Consume

change in spending / change in disposable income

7

Returns to Scale : increases in output that result from increases in production costs

% increase in output / % increase in input

8

Increase in Output (Equilibrium GDP)

change in spending / marginal propensity to save (MPS)

9

Expenditure Approach for GDP

The “expenditure approach” to GDP determination includes personal consumption expenditures (C), gross private domestic investment (Ig), government purchases of goods and services (G), and exports minus imports or net exports (Xn). GDP = C + Ig + G + Xn

10

Income Approach for GDP

Business profits, compensation to employees, and capital consumption allowance (depreciation) are all variables used in the “Income Approach” to GDP determination.