Formula's

Question 1

Disposable Income

Answer 1

total household income - taxes

Question 2

price index in a current year

Answer 2

( cost of market basket in a given year/cost of market basket in base year ) x 100

Question 3

Inflation rate

Answer 3

( price index in year 2 - price index in year 1 / price index in year 1 ) x 100

Question 4

Expenditure function

Answer 4

C + I + G + NX = Y

consumption + investment + government spending + net export = expenditure

Question 5

production function

Answer 5

Y = A x f(K,L)

Y = output
A = technology
K = capital
L = labour

Question 6

Closed economy

Answer 6

Y = C + S

y = output
S = marginal propensity to save
C = consumption

Question 7

Labour force

Answer 7

employed + unemployed

Question 8

unemployment rate

Answer 8

number of unemployed / labour force x 100

Question 9

labour force participation rate

Answer 9

( labour force / adult population ) x 100

Question 10

velocity and the quantity equation - the speed at which money changes hands

Answer 10

V = ( P x Y ) / M

V = velocity
P = the price level
Y = the quantity of output
M = the quantity of money

Question 11

Present value

Answer 11

X / ( 1 + r ) n

X = amount of money in future
r = interest rate
n = number of years

Question 12

future value

Answer 12

X = ( 1 + r )

X = amount of money in future
r = interest rate

Question 13

real gdp

Answer 13

nominal gdp / gdp deflator x 100

Question 14

real gdp per capita

Answer 14

real gdp / population

Question 15

consumer price index

Answer 15

(cost of basket in current year / cost of basket in base year) x 100

Question 16

money multiplier

Answer 16

1 / reserve requirement ratio