AP Macroeconomics Formulas

• Natural Rate of Unemployment: Frictional + Structural
• CPI: Current Market Basket/Base Year Market Basket • 100
• Labor Force Participation Rate: Labor Force/ Working age population • 100
• Unemployment Rate: Unemployed/Labor Force • 100
• GDP Expenditure Equation: C + I + G + X + (X-M)
• Inflation Rate: CPI2 - CPI1 / CPI1 • 100
• Fisher Equation: nominal% = real% - inflation%
• GDP Deflator: Nominal GDP / Real GDP • 100
• Given Year Market Basket: Current year prices / base year quantities
• Nominal GDP: Current year prices • current year quantities
• Real GDP: Base year prices • current year quantities
• Aggregate Demand: C + I + G + (X-IM)
• Marginal Propensity to Consume: Change in consumption / Change in disposable income
• Marginal Propensity to Save: Change in Savings / Change in Disposable Income
• Spending Multiplier

  (1/MPS) or 1 / (1-MPC)
• Aggregate Spending

  Spending x Spending Multiplier
• Aggregate Income After Tax

  AY = AT x Tax Multiplier
• Quantity Theory of Money

  M(V) = P(Y)
• GDP per capita

  GDP/population
• Tax Multiplier: -MPC / MPS
• Balanced Budget Multiplier: 1
• Money Multiplier: 1 / Reserve Ratio Requirement