Tiêu đề Summary of important formula - PE.docx.pdf ✅

1/ Opportunity cost of meat = potato/meat = 32/8 = 4 potato (for Frank) 2/ Elasticity: a. Price elasticity (midpoint method): b. Income elasticity of demand: c. Cross-price elasticity of demand: 3/ Costs as Opportunity costs: - Explicit costs: input costs that require an outlay of money by the firm - Implicit costs: input costs that do not require an outlay of money by the firm - Total (opportunity) cost = Explicit cost + Implicit cost 4/ Firm’s profit-maximizing quantity at MR = MC => Profit = (P - ATC) x Q 5/ Gross domestic product (GDP), GDP deflator, inflation rate: Y = C + I + G + NX - Y = GDP - C = Consumption: spending on goods of households - I = Investment: purchases of capital goods for later production - G = Government expenses/ purchases (transfer – Social Security benefit, unemployment insurance paid are not included)
- NX = Net exports = Exports - Imports (Close economy is not applied) 6/ Consumer price index (CPI), inflation: The Fisher Effect: Nominal interest rate = Real interest rate + Inflation rate 7/ Savings, Investment, Market for Loanable funds a. National savings: S = I = Y - C – G (= private savings + public savings) b. Private savings: Y – C – T c. Public savings: T – G d. Market for loanable funds: 8/ Unemployment: Labour force = Employed + Unemployed (Number) Unemployment rate = (%) Number of unemployed Labor force ×100 Labour force participation rate = (%) Labor force Adult population ×100
9/ Money supply: => reserve ratio = $10/$100 = 10% Money multiplier = 1/reserve ratio Total money supply = (original deposits)*(Money multiplier) = a*1/rr (=100*1/10) = $1,000) 10/ The Quantity Equation M × V = P × Y - M = Quantity of money - V = Velocity of money (the rate at which money changes hands) - P x Y = Nominal GDP (value of the economy’s output) - P = Price level (GDP deflator) - Y = Real GDP 11/ Open economies - Macroeconomics: Net export = Value of exports - Value of imports Net Capital Outflow (NCO) = Purchase of foreign assets by domestic residents - Purchase of domestic asset by foreigners = Outflows – Inflows For an economy as a whole, NCO = NX Open economies: S = I + NCO OR Purchasing-Power Parity: 1 = eP/P* 12/ Market for loanable funds & market for foreign-currency exchange – open economies: a. Market for loanable funds: S = I + NCO (S: supply, I+NCO: demand, real interest rate = price) b. Market for foreign-currency exchange: NCO = NX (NCO: supply, NX: demand, real exchange rate = price) 13/ Marginal propensity to consume (MPC): ⇨ the fraction of extra income that households consume rather than save. Multiplier = 1/(1 − MPC) ⇨ Total change in Aggregate Demand = [1/(1 − MPC)]*Change in Government purchases 14/ Phillip curve equation:
Unemployment rate = Natural unemployment rate - a*(actual inflation - expected inflation) a: a parameter measures how much unemployment responds to unexpected inflation.