ECON 302 Study Guide - Final Guide: Real Interest Rate, United States Dollar, Production Function

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26 Jul 2016
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EQUATION SHEET
(*) Real GDP = Y=C+I+G+NX
(*) Nominal GDP= P·Y
(*) GDP Deflator= P
(*) Exchange Rates: enom =Foreign Currency
US Dollar ;epp =Price in country i
Price in US ;ereal =enom
epp
(*) GDP ppp =GDPlocal currency
epp
(*) Chain Weighted GDP Growth Rate: gY,t =Pipi,t1qi,t
Pipi,t1qi,t10.5Pipi,tqi,t
Pipi,tqi,t10.5
(*) Real Interest Rate (approximation): r=iπ
(*) Inflation: πt+1 =Pt+1Pt
Pt
(*) Expected real interest rate: E[r] = iπe
(*) Elasticity of y with respect to x: y,x =y
x
x
y=ln(y)
ln(x)
(*) Growth rate, and average growth rate: gt=ytyt1
yt1,¯g=yt
y01/t
1
(*) Production Function: Y=AF (K, N) (A = TFP; K=Capital; N=Labor input)
(*) Per-capita production: y=Af(k)
(*) Labor’s share of income = wN
P Y
(*) Marginal product of labor and capital
MP N =Y
N =AF (K, N)
N
AFN
MP K =Y
K =AF (K, N)
K
AFK
(*) Cobb Douglas production function: Y=AKαN1α
(*) Growth Accounting: A
A=Y
YY,K K
KY,N N
N
(*) Capital Accumulation: Kt+1 = (1 δ)Kt+It
(*) Per-capita capital accumulation: kt+1 =(1δ)kt+it
1+n
(*) Steady-state required investment: (n+δ)kss
1
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