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AP Macroeconomics Formula Sheet

Every formula you need for the AP Macroeconomics exam in one printable reference. No formula sheet is provided on exam day — memorize these.

GDP & National Income

GDP (Expenditure Approach) GDP = C + I + G + NX

Net Exports NX = Exports − Imports

Real GDP Real GDP = Nominal GDP / (Price Index / 100)

GDP Deflator GDP Deflator = (Nominal GDP / Real GDP) × 100

Economic Growth Rate Growth Rate = ((Real GDP_new − Real GDP_old) / Real GDP_old) × 100

Unemployment & Inflation

Unemployment Rate UR = (Unemployed / Labor Force) × 100

Labor Force LF = Employed + Unemployed

Labor Force Participation Rate LFPR = (Labor Force / Working-Age Pop.) × 100

Inflation Rate (CPI) Inflation = ((CPI_new − CPI_old) / CPI_old) × 100

Real Interest Rate (Fisher Equation) Real Rate = Nominal Rate − Inflation Rate

Real Wage Real Wage = Nominal Wage / Price Level

Fiscal Policy Multipliers

MPC + MPS MPC + MPS = 1

Spending Multiplier Multiplier = 1 / MPS = 1 / (1 − MPC)

Tax Multiplier Tax Multiplier = −MPC / MPS

Balanced Budget Multiplier BBM = 1 (always, when ΔG = ΔT)

Change in GDP (government spending) ΔGDP = ΔG × (1 / MPS)

Change in GDP (taxes) ΔGDP = ΔT × (−MPC / MPS)

Money & Banking

Money Multiplier Money Multiplier = 1 / Reserve Ratio

Max Change in Money Supply ΔMS = Excess Reserves × (1 / rr)

Required Reserves RR = Deposits × Reserve Ratio

Excess Reserves ER = Total Reserves − Required Reserves

Quantity Theory of Money MV = PQ (M = money supply, V = velocity, P = price level, Q = output)

International Trade & Finance

Balance of Payments Current Account + Capital Account = 0

Current Account NX + Net Income + Net Transfers

Terms of Trade OC_A < Terms of Trade < OC_B

Exchange Rate Effect ↑ Domestic interest rate → ↑ Capital inflow → ↑ Currency demand → Currency appreciates

FAQ

Common questions

Is a formula sheet provided on the AP Macroeconomics exam?

No. The AP Macroeconomics exam does not provide a formula sheet. You must memorize all formulas. This reference sheet covers every formula you need to know for exam day.

What are the most important formulas for AP Macroeconomics?

The most important formulas include: GDP (C + I + G + NX), the Spending Multiplier (1/MPS), the Money Multiplier (1/reserve ratio), the Tax Multiplier (−MPC/MPS), and the Real Interest Rate formula (nominal rate − inflation rate). Multiplier questions appear on virtually every AP Macro exam.

How do you calculate the spending multiplier for AP Macro?

Spending Multiplier = 1 / MPS = 1 / (1 − MPC). If MPC = 0.8, then MPS = 0.2 and the multiplier = 1 / 0.2 = 5. A $100 billion increase in government spending would increase GDP by $500 billion.

What is the money multiplier formula for AP Macro?

Money Multiplier = 1 / Reserve Ratio. If the reserve ratio is 10% (0.10), the money multiplier is 1 / 0.10 = 10. The maximum change in the money supply equals excess reserves × money multiplier.

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