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CPI and GDP Deflator - Coggle Diagram
CPI and GDP Deflator
CPI
$$\frac{\text{Prices In current Yr}}{\text{Prev Yr}} \times 100$$
To measure Inflation
$$\dfrac{(Yr1-Yr2)}{Yr1} \times 100$$
Reflects the prices of all goods ansd services bought by consumers(these can in clude im ported goods
GDP Deflator
$$\frac{\text{Nominal GDP}}{\text{Real GDP}} \times 100$$
reflects the prices of all
goods and services produced domestically
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$$C = c_0 + c_1Y_D $$
$$c_1 \text{ is the marginal propensity to consume (MPC} =\frac{\Delta C}{\Delta Y_d}\text{)}$$
Where Yd is disposable income
Yd = Disoosable Income
$$S = Y_d - C$$
$$\text{MPS} = \frac{\Delta S}{\Delta Y_d}$$
$$Y_D = Y - T$$
$$C = c_0 + c_1(Y - T) $$
Y = Z , equilibrium
$$Y = \frac{1}{1 - c_1}[c_0 + I + G - c_1T]$$
$$Autonomous Spending$$
$$c_0 + I + G - c_1T$$
Multiplier : $$\frac{1}{1 - c_1}$$