# ECON 132 Lecture Notes - Lecture 1: Nominal Interest Rate, Rishi, Production Function

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School
UCSD
Department
Economics
Course
ECON 132 Econ 259 1-6 Goran Skosples
Formula Sheet
1. National Income Accounting Identity
Y=C+I+G+NX
2. GDP deﬂator
GDP deﬂator = nominal GDP
real GDP
3. Implicit measure of inﬂation
Inﬂation rate 2004 =µGDP deﬂator 2004 GDP deﬂator 2003
GDP deﬂator 2003 100%
4. Consumer Price Index (CPI)
CPI in any month = Cost of basket in that month
Cost of the same basket in base period 100
5. Inﬂation rate (using CPI)
Inﬂation rate 2004 =µCP I2004 CP I2003
CP I2003 100%
6. Labor force
Labor force (L) = employed persons (E) + unemployed persons (U)
7. Unemployment
Unemployment rate (U/L) = # of unemployed (U)
labor force (L)100%
8. Labor force participation
Labor force participation rate (L/P OP ) = labor force (L)
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s×E=f×U
where sis the rate of job separation and fis the rate of job ﬁnding.
10. Natural rate of unemployment
If you manipulate the condition for the steady-state in the labor market (9), you would
get U
L=s
s+f
11. Marginal productivity of capital and labor and real prices of capital and labor for the
Cobb-Douglas production function Y=F(K, L) = AKαL1α:
MP K =αY
K
MP L = (1 α)Y
L
12. Real prices of capital and labor
MP K =r
MP L =w
13. National income and total capital and total labor incomes
total capital income = rK=MP K ×K
total labor income = wL=MP L ×L
national income Y= total capital income + total labor income
Y=MP K ×K+M P L ×L
14. Consumption function
C=a+bY d
where ais the intercept, bis the marginal propensity to consume (MPC) and Ydis
disposable income (YT).
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