Formulas Sheet Macroeconomics

Gross national product

Net national product
National income
Profits + rent + interest

Profits
Investments
Investments
Investments
Direct taxes
Net direct taxes
Indirect taxes
Net Taxes
Net Taxes
Gross national product
Gross national product
National Income
Net National Income
Net National Income
Net National Income
Personal Income (gross)
Disposable income
Disposable income
Disposable income
Disposable income
Disposable income
Savings Net
Savings Net
Governments savings
Governments savings
Business savings
Private/Public savings
Business savings including D
Savings + D
GDP

Transfer payments

TR

Wages
Export
Import
Excess of Export
Excess of Import
Disposable income

W
X
IM
(X-IM)
(IM-X)
Yd

Dr. Yariv Welzman

GNP = C + G + GI + X IM
Y = NNP = GNP D = C + G + GI + X IM
NI = W + R = Y TIN
R
Pr = TDb + Div + Pru
I = GI D
GI + X IM
I + X IM
TD = T Db + TDp
TDN = TD TR
TIN = (TI - Sub)
T = TIN + TDN
T = T Db + T Dp TR + TI Sub
GDP = W + R + TIN + D
GDP = NI + Tin + D
NI = GNP D TI + Sub = Y (TI Sub)
Y = NNP = W + R + Int + Div + TDb + Pru + (TI - Sub)
Y = NNP = C + G + I + X IM
Y = NNP = NI + TIN
PI = NI + TR TDb SB
Yd = Y T SB
Yd = PI - TDp
Yd = NI - Pr u TD b TD p + TR
Yd = NI - P r u TDN
Yd = Y TIN TDN Pru
S = SG + SB + SP
S = I + X IM
SG = TIN + TDN G
SG = T G
SB = Pru
SP = Yd C
Sb' = Pr u + D
S' = SG + Sp + SB' = IB + X IM
GDP = GNP X + IM

Profits + rent + interest

Savings
Government savings
Private savings
Deficit
Subsidies
Net tax
Direct business taxes
Direct personal taxes
Indirect taxes
Net indirect taxes

R
S
SG
SP
SG < 0
Sub
T
TDb
TDp
TI
TIN

Private consumption
Depreciation
Dividends
Gross domestic product
Public spending
Gross national product
Gross investment
Net investments
Interest
Import
National income
Net national product
Profits
SB = Business Saving

C
D
Div
GDP
G
GNP
GI
I
I nt
IM
NI
NNP
Pr
Pru

Formulas Sheet Macroeconomics

Real and nominal GDP/NDP

[At period t, Yt = real NNP, YtN = nominal NNP, Pt = price index]

Inflation
Inflation at period t - Rate of change in P between two periods:
Cumulative inflation rate between periods 1 to T:
1-T.. =
Avg. Annual inflation rate:
Percentage changes (Fischer Effect)

Where g is real growth, i.e. the rate of change in Y between two periods:
Keynesian Model
Private consumption

C = C0 + MPCYd, SP = C0 + MPSYd

[yi: disposable income of group i , ni: number of households in group i, Y: n1 y1 + n2 y2 ]

MPC + MPS = 1
APC + APS = 1

Investments: Net Present Value of cash flows

[NPV: net present value, Xo: cost of investment, PV: present value, X: future return, r: interest,
N: years, IRR: internal rate of return ]

Dr. Yariv Welzman

Formulas Sheet Macroeconomics

The Goods Market

Aggregate Demand
AD = C + I + G + X M

Keynesian Multiplier
o Effects of changes in the AD when Y changes: Y* = AD k

[MPE = (1t)MPC + MPI + MPX MPM] (MPX and MPM are the marginal propensities to export
and import, correspondingly); t = tax rate (proportional tax imposed on income).

Use the Keynesian multiplier when the money market is inactive / fixed interest rate

The effect of a fiscal policy on Aggregate Demand (AD): AD = G MPC T

Calculation of final changes:
o C = C0 MPC Yd,
where Yd = Y T and T =T0 + tY.
o I = MPI Y.
o M = MPMY
o SG = T G
Equilibrium in the goods market: AD = Y

Production gap and deflation gap:

AD0 =

AD0 = deflationary gap, Y =YF Y*, output gap.

The Money Market

Monetaryy base: B = PC + R
(Public Currency + Reserves)
Money Supply: Ms = PC + D
(Public Currency + Checking Deposits)

Reserve Ratio on checking deposits: D =

Money (Deposit) Multiplier:

, Reserve Ratio on savings deposits: S =

Reports:
Capital Accumulations
Income-Expenditure
Expenditure
C
I
G
X-IM
=

Income

Savings

NNP = Y
=

Sp
Sb
Sg
=

Investments

Unified Banks
Assets

Deposits

I
XM
=

Reserves
Deposits
Savings

Savings

Loans
=

Dr. Yariv Welzman

Liabilities

Factor
payments

Net Value Added

W
R
Profit
TI

Revenues
Inventory increase
(Purchases)
(depreciation)