equations Flashcards
total value of expenditures on goods and services (national income accounting identity) or GD muthafukin P
trade balance
Y = C + I + G + X - M
X = exports
M = imports
G = gov expenditure
C = consumption (household domestically and abroad)
I = investment (goods bought by private agents)
X - M = trade balance
GNP
GNP = GDP + production of US owned capital and labor in foreign countries 0 production of foreign owned capital in US
real gdp
uses a base year to calculate gdp
real gdp1 = gdp1 - gdp 2/ gdp2
use the quantity sold of the current year, but prices of the base year
gdp deflator
how much prices of goods and services in a country have risen since the base year
GDP deflator = nominal gdp/real gdp x 100
nominal gdp
gdp = price of current year x quantity of current year
CPI
basically gdp deflator
cpi = cost of buying basket in year 1/ cost of buying basket in base year x 100
inflation
rate of increase in prices
cpi in year 2 - cpi in year 1 / cpi in year 1
cpi = cost of buying basket in year 1/ cost of buying basket in base year x 100
gdp per capita (income per capita)
gdp/ total population
how to convert income into US income
ex mexico
mexican income = mexican income x exchange rate
income in purchasing power parity ppp
mexican income pc in ppp =
mexican income in pesos x ppp
income per worker
gdp/number of people in employment lol
total efficiency units of labor H
H = L x h L = workers in economy, h = average efficiency of human capital of workers
aggregate production function
Y = A x F(J,K) Y = GDP K = physical capital stock of nation H = efficiency units of labor A = index of technology there is some sort of relationship between k and H, assuming hell give this to us
savings rate
total saving / gdp
labor force
employed + unemployed
unemployment rate
unepmloyed / labor force
labor force = employed + unemployed
nominal interest rate vs real interest rate
nominal interest rate
i x L, where L is dollars and i is interest rate
real interest rate is nominal interest rate minus inflation
real interest rate r = i - inflation
stockholders equity
total assets - total liabilities
growth rate of nominal gdp
inflation rate + growth rate of real gdp
quantity theory of money
money supply/nominal gdp = constant
growth rate of money supply
growth rate of money supply = inflation rate + growth rate of real gdp
what is realized real interest rate
when the fed gives loans, it gives loans with a nominal short term interest rate
this is different from the real interst rate that will occur over the life of the loan
realized real interest = nominal interest rate - realized inflation rate
what is expected interest rate
when the fed gives loans, it gives loans with a nominal short term interest rate
this is different from the real interst rate that will occur over the life of the loan
realized real interest = nominal interest rate - realized inflation rate
expected interest rate
we do not know the realized innflatoinn rate, so we have an expected inflation rate
expected real interest rate = nominal interest rate - expected inflation rate
