Formulas

• Nominal GDP


  P x Q
• Real GDP


  Pt+Pt-1/2
• % Change in real GDP


  % change in nominal GDP - % change in prices
• Years it takes something to double

  70/ annual growth rate
• Labor force participation rate

  Labor force/ working age population x 100
• Unemployment rate


  unemployed/ labor force x 100
• Inflation rate


  price level this year - price level last year/ price level last year * 100
• GDP deflator


  nominal GDP/ Real GDP * 100
• Todays dollars


  Another time's dollars x Price level today/Price level in another time
• Percent change in real value


  % change in nominal value - percent change in prices
• Real interest rate


  Nominal interest rate - inflation rate
• Savings


  Income - consumption
• Compounding


  Present value X (1+r)^t
• Discounting


  Future value in t years X 1/(1 + r)^t
• Present value of a stream of payments


  next years revenue/ r + d
• User cost of capital


  (r + d) X c
• Nominal exchange rate


  number of years/ number of dollars
• Number of yen


  Number of dollars x nominal exchange rate
• Number of dollars


  Number of yen/ nominal exchange rate
• Real exchange rate


  domestic price in dollars/ foreign price converted to dollars
• Current account balance


  Income from abroad - income paid abroad
• Financial account balance


  financial inflows - financial outflows
• Output gap


  actual output - potential output / potential output x 100
• Inflation expectations


  Expected inflation + demand-pull inflation + cost-push inflation