Macroeconomics Final Review

GDP (Expenditure Approach)

• C + I + G + NX

• C x I x G x NX

• C + I + G / NX

• C + I x G + NX

Real GDP of current year

• Nominal GDP (current) x GDP Deflator (base) / GDP Deflator (current)

• Nominal GDP (current) + GDP Deflator (base) / GDP Deflator (current)

• Nominal GDP (current) / GDP Deflator (base) / GDP Deflator (current)

• Nominal GDP (current) + GDP Deflator (base) + GDP Deflator (current)

Inflation Rate

• Price Index (current) - Price Index (base) x 100

• GDP Deflator (current) - GDP Deflator (base) x 100

• GDP Deflator or Price Index (current) - GDP Deflator or Price Index (base) x 100

• GDP Deflator (current) + GDP Deflator (base) / 100

Level of injections

• Government Spending + Exports + Investment

• Government Spending + Imports + Investment

• Government Spending x Exports x Investment

• Government Spending - Exports + Investment

Level of withdrawals/ leakages

• Taxes + Exports + Savings

• Taxes + Imports + Savings

• Taxes + Investments + Savings

M1

• Currency + Travel Check + Checking Deposit

• Currency / Travel Check + Checking Deposit

• Currency + Checking Deposit

• Currency x Travel Check x Checking Deposit

M2 formula

• M1 + Time Deposits + MMMF + Saving Deposit

• M2 + Time Deposits + Saving Deposit

• M1 + Time Deposits + MMMF

• M1 / Time Deposits x MMMF + Saving Deposit

4 Characteristics of money

• Divisible without losing its value

• Portable and easy to carry

• Acceptable

• Ability to keep its value

• It’s green

Function of money

Capital Account Balance

• Foreign Assets at home - Domestic Assets Abroad

• Capital inflows - Capital outflows

• Foreign Assets at home or Capital inflows - Domestic Assets Abroad or Capital outflows