Symbols and Formulas

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8
Course Number: 

 

 

Symbols and Abbreviations

 

π

Profit

Δ

Change

a

Autonomous Consumption

AD

Aggregate Demand

AE

Aggregate Expenditures

APC

Average Propensity to Consume

APS

Average Propensity to Save

AS

Aggregate Supply

b

see MPC

bYd

Income-Induced Consumption

C

Consumption

cp

Ceteris Paribus (“All other things being equal”)

CPI

Consumer Price Index

ER

Excess Reserves

G

Government Spending

GDP

Gross Domestic Product

GNP

Gross National Product

I

Investment

K

Capital

k

Keynesian Multiplier

LF

Labor Force

LFPR

Labor Force Participation Rate

LRAS

Long Run Aggregate Supply

M

Imports

MB

Marginal Benefit

MC

Marginal Cost

mm

Money Multiplier

mpc

Marginal Propensity to Consume (sometimes abbreviated b)

mpe

Marginal Propensity to Expend

mps

Marginal Propensity to Save

MS

Money Supply

N

Employment/Labor

p

Price

P

Price Level

q

Quantity

r

Interest rate

RR

Required Reserves

rrr

Required Reserve Ratio

S

Savings

SRAS

Short Run Aggregate Supply

T

Taxes

X

Exports

Y

Real Output/Income

Yd

Disposable Income

                       

 

Formulas/Identities/Laws

 

AD =

(a + bYd) + I + G + (X-M)

APC =

C/Yd

APS =

S/Yd

 

By definition, APC + APS = 1

C =

a + bYd

GDP =

AD = Y = C + I + G + (X-M)

Inflation rate =

(new price index – old prince index)/old price index

k =

1/mps = 1/(1-mpc)

Law of Demand

As price increases, quantity demanded decreases, cp  

Law of Supply

As price increases, quantity supplied increases, cp

LFPR=

(LF/non-institutionalized population) * 100

mm =

1/rrr

MPC =

ΔC/ΔYd

MPS =

ΔS/ΔYd

 

By definition, MPC + MPS = 1

Per capita GDP=

GDP/population

Real GDP =

(nominal GDP /deflator) * 100

Yd =  

Personal Y – Personal taxes

Yield on a bond =

annual interest payment/ price paid

unN Rate=

(unN/LF) * 100