Formulas for Economics for UGC NET Notes and Study Material!

The introduction should be an entranceway to the economic issue at stake, with the purpose of engaging the reader and giving a clear keypoints layout on the essay's argument. Start with an interesting hook, which can be a relevant statistic or thought-provoking question. For example, "Income inequality has become the defining economic issue of our time, with the wealthiest 1% now holding more wealth than the bottom 90% combined." This number shocks right at its start and sets the tone for the importance of the subject. Then, present the setting by briefly describing the background or development of the problem to set the reader up.

Formula for economics is a vital topic to be studied for the commerce related exams such as the UGC NET Commerce Examination.

In this article, the readers will be able to know about the following:

• Formulas for Economics

Formulas for Economics

Here's a list of some key economics formulas that are commonly used in various fields of economics. These formulas cover topics such as microeconomics, macroeconomics, finance, and econometrics.

Microeconomics Formulas

The stated formulas are central formulas in both microeconomics. They are applied to statements explaining consumer behavior, market balance, and various production decisions, as well as the general performance of economies in terms of output, employment, inflation, and other major indicators. The formulas of microeconomics formulas have been stated below.

Demand Function

Qd=D(p)

Where Qd is quantity demanded and D(p) is the demand function dependent on price p.

Supply Function

Qs=S(p)

Where Qs is quantity supplied and S(p) is the supply function dependent on price p.

Equilibrium Price and Quantity 

Qd=Qs

At equilibrium, quantity demanded equals quantity supplied.

Consumer Surplus

CS=∫0Q∗(D(p)−p) dp

Where Q∗ is the equilibrium quantity, D(p) is the demand function, and p is the price.

Producer Surplus

PS=∫0Q∗(p−S(p)) dp

Where S(p) is the supply function.

Price Elasticity of Demand

Ed=% change in quantity demanded/% change in price=(ΔQd/Qd)/(Δp/p)

Income Elasticity of Demand

Ey=% change in quantity demanded/% change in income=(ΔQd/Qd)/(ΔY/Y)

Cross-Price Elasticity of Demand

Exy=% change in quantity demanded of X/% change in price of Y

Macroeconomics Formulas

The stated formulas are central formulas in both macroeconomics. They are applied to statements explaining consumer behavior, market balance, and various production decisions, as well as the general performance of economies in terms of output, employment, inflation, and other major indicators. The formulas of microeconomics formulas have been stated below.

Gross Domestic Product (GDP)

GDP=C+I+G+(X−M)GDP = C + I + G + (X - M)

Where C is consumption, I is investment, G is government spending, X is exports, and M is imports.

GDP Deflator

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

Unemployment Rate

Unemployment Rate=(Number of unemployed/Labor force)

Inflation Rate

Inflation Rate=(Pt-(Pt-1))×100

Where Pt is the price level in period t.

Phillips Curve

Unemployment Rate=Natural Rate of Unemployment−β⋅(Inflation Rate−Expected Inflation Rate) Where β is the coefficient determining the slope.

Fisher Equation (Nominal and Real Interest Rates)

i=r+π

Where i is the nominal interest rate, r is the real interest rate, and π is the inflation rate.

Finance Formulas

Here are some important finance formulas commonly used in various financial calculations and analyses:

Present Value (PV)

PV=FV(1+r)^n

 Where FV is the future value, r is the discount rate, and n is the number of periods.

Net Present Value (NPV)

NPV=t=0TCFt/(1+r)t=C0

Where NPV = Net present value, CFt = Cash flow in period t, r = Discount Rate (cost of capital), C0 = Initial investment

Internal Rate of Return (IRR)

Solve for r in NPV=0

Econometrics Formulas

These formulas form the foundation of econometric analysis, enabling economists and researchers to quantify relationships between variables, make predictions, and test economic theories using real-world data.

Simple Linear Regression

Yi=β0+β1Xi+εi 

Coefficient of Determination (R-squared)

R^2=Explained variation/Total variation=∑(Y^i−Yˉ)^2/∑(Yi−Y)^2

Standard Error of the Estimate

SE= ∑(Yi−Y^i)^2/(n−k)

Conclusion

In conclusion, this essay has argued that globalization, though a means of economic growth, has led to widening income disparities. Then, summarize all the points raised in this essay, emphasizing its importance and implications. It has examined the root causes of inequality, including technological advancements and global trade imbalances, and assessed their economic consequences, such as reduced social mobility and heightened political unrest.

Fundamentals of economics is a vital topic per several competitive exams. It would help if you learned other similar topics with the Testbook App.

Formulas for Economics Previous Year Question

1. What is the GDP formula and its significance?

Ans. GDP formula: C + I + G + (X - M). Measures total economic output, including consumption, investments, government spending, and net exports.