| Paasche Index (GDP Deflator) | Laspeyres Index (Consumer Price Index) | Rate of Inflation |
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 |
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Macroeconomics Review Notes
Basic Macroeconomic Assumption
Circular flow of income between households, businesses, and other macroeconomic actors
Basic Macroeconomic Theory
Aggregate Supply = Aggregate Demand
| GDP = C + I + G + (X-M) where | GDP | = |
Gross Domestic Product |
| C | = |
consumption | |
| I | = |
investment | |
| G | = |
government expenditure | |
| (X-M) | = |
net exports (a.k.a. leakages) |
GNP = gross domestic product (or GDP) + net foreign income
Indices of Inflation
| Paasche Index (GDP Deflator) | Laspeyres Index (Consumer Price Index) | Rate of Inflation |
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|
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Monetarist Theory
| MV = YP where | M | = | supply of money |
| V | = | velocity of money | |
| Y | = | real output | |
| P | = | price level |