Test Hints

It has been a while since I have graced these pages with a post.  As the holidays come around, and we have copious amounts of time to sit around and watch internet videos, I will increase the frequency of my posts.

As for the test, it is four questions, and it covers pretty much all that we talked about.  Pay particular attention to Okun's Law, which was Key Question #8 for chapter 8.  I have listed the following formulas for your reference on the test.  Perhaps that is too much, but I'm sure that next time you will have the formulas memorized.

Time to go check out Henderson Center!

- Mr. Joy

Economic Measurement Formulas

GDP = C + Ig + G + Xn 

= GDP

Compensation of employees 

Rents

Interest 

Proprietors’ income

Corporate income taxes

Dividends

Undistributed corporate profits

Indirect business taxes

Consumption of fixed capital

+ Net foreign factor income earned in the US

NDP = C + In + G + Xn = GDP – depreciation (consumption of fixed capital)

NI = NDP – net foreign factor income – indirect business taxes

PI = NI – Social Security contributions – Corporate income taxes – Undistributed corporate profits + Transfer payments

DI = PI – Personal taxes = C + S

MPC+MPS = 1

Okun’s law – every 1% by which actual unemployment > the natural rate, a negative GDP gap of 2% occurs