Macro Formulas 1st Partial 20-21
Macro Formulas 1st Partial 20-21
MACROECONOMICS
(FIRST PARTIAL)
EDITION A.A. 2020 - 2021
MACRO VARIABLES
GDP (GROSS DOMESTIC PRODUCT):
1) EXPENDITURE SIDE: final goods and servcies + exported intermediate goods at current prices
2) SUM OF VALUE ADDED: value of intermediate goods used by each form (“value-added” to the economy by
each firm), as VAoutput – VAintermediate goods
3) INCOME SIDE: sum of incomes produced à labor income/Wages (W) + capital income/Profits (𝜋) + tax
income/Taxes (T) (+ rent income)
NOMINAL GDP:
REAL GDP:
GDP DEFLATOR:
2) With CPI:
𝐼𝑃𝐶$ − 𝐼𝑃𝐶$
𝜋!"# =
𝐼𝑃𝐶$%&
3) With GROWTH RATE:
π = g €( − g (
Note that pCPI can differ from p
UNEMPLOYMENT RATE:
PARTICIPATION RATE:
EMPLOYMENT RATE:
AUTONOMOUS SPENDING:
𝐴 = 𝑐! − 𝑐" 𝑇 + 𝐼 + 𝐺
PRIVATE SAVINGS:
𝑆( = 𝐼 + 𝐺 − 𝑇
PUBLIC SAVINGS:
IS-LM MODEL
CONSUMPTION FUNCTION:
INVESTMENT FUNCTION:
IS FUNCTION:
With 𝑑" = sensitivity of investments to income; 𝑑# = sensitivity of investment to the interest rate
With 𝑓" = sensitivity of money demand to income; 𝑓# = sensitivity of money demand to investment
LM FUNCTION:
EXPECTED INFLATION:
1
1
𝑃0&" − 𝑃0
𝜋0&" =
𝑃0
RISK PREMIUM:
(1 + 𝑖)𝑃
𝑥=
1−𝑃
THE LABOR MARKET
WAGE-SETTING CURVE (WS):
Where “𝑃𝑒” = expected price; “z” = catchall variable (employment protection and other)
Where “A” = marginal productivity of labor and “𝜇” = markup level in the products market
Where
1) Original (𝖯 = 0)
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For doubts or suggestions on the handout:
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