Examination Formula Sheet
Unemployment Rate =
Number of Unemployed
Labour Force
X 100
Labour Force = Unemployed + Employed
Labour Force Participation Rate
=
Price Index
=
Labour Force
Working Age Population
Cost of market basket in a given year
Cost of market basket in base year
Annual rate of Inflation
=
X 100
X 100
Current price index−Previous year price index
Previous year price index
X 100
% change in real income = % change Nominal Income – Inflation Rate in %
GDP IPI =
Nominal GDP
Real GDP
GDP = C + I + G + X
X 100
where C = Consumption expenditures
G = Government expenditures
I = Gross investment expenditures
X = Net exports
NDP = GDP- depreciation
NDP = C + I + G + X - Depreciation
Net Investment = I – Depreciation
Personal Income = Personal Consumption + Personal Saving + Personal Taxes
Disposable Personal Income = Personal Consumption + Personal Saving
Real GDP =
Nominal GDP
Price Index
X 100
Rule of 70 says that the approximate # of years for prices to double =
Annual Growth Rate (% change) of Real GDP=
70
Annual rate of inflation
Later Real GDP−Earlier Real GDP
Earlier Real GDP
X 100
Examination Formula Sheet
Total Planned Expenditures (TPE) = C + I + G + X
DPI = GDP – Taxes
DPI = C + S
Equilibrium: GDP = TPE
Average Propensity to Consume (APC) = C/DPI
Average Propensity to Save (APS) = S/DPI
APC + APS = 1
Marginal Propensity to Consume =
Marginal Propensity to Save =
C
C
=
GDP DPI
S
S
=
GDP DPI
MPC + MPS = 1
Expenditure Multiplier =
1
𝑀𝑃𝑆
=
1
1−𝑀𝑃𝐶
 Equilibrium GDP =  Initial Expenditure x Expenditure Multiplier
Deficit or Surplus = tax revenue – government expenditure
M1+= Currency outside financial institutions plus chequable deposits (personal and nonpersonal) held at
chartered banks and near banks (trust and mortgage loan co.’s, credit unions and caisse populaires)
M1++ = M1+ plus all nonchequable deposits at chartered banks and near banks
M2 = currency outside banks plus all personal deposits (including fixed term deposits) at chartered banks
only plus nonpersonal demand (chequable) and notice (nonpersonal nonchequable, excluding fixed term
deposits) deposits at chartered banks only
M2+= M2+ plus all deposits at nonbank institutions (near banks, life insurance companies’ individual
annuities, and personal deposits at government-owned saving institutions) plus money market mutual
funds (MMMFs)
M2++ = M2+ plus Canada Savings Bonds and non-money market mutual funds
M3 = M2 plus nonpersonal term deposits and foreign currency deposits of Canadian residents
Maximum amount of new loans (deposits) that a single bank can create is equal to its Excess Reserves.
Excess Reserves = Actual Reserves - Desired Reserves
Desired Reserves = Desired Reserve Ratio  Demand Deposits
Maximum amount of new money (deposits) that the banking system (all banks combined) can create is:
Change in Money Supply = Excess Reserves x Money Multiplier
1
Money multiplier =
Desired Reserve Ratio