formula-sheet

CFA Level I Economics Formula Sheet

Public economics formula sheet for elasticity, GDP, inflation, FX, and parity relationships.

TL;DR

Economics formulas are mostly percentage-change, parity, and macro-accounting relationships. Keep quote conventions and real-versus-nominal distinctions straight.

Formula Reference

Elasticity

Elasticity = % change in quantity / % change in driver

Applies to price, income, and cross-price elasticity.

GDP

GDP = C + I + G + X - M

Expenditure approach.

Exact Fisher relation

1 + nominal = (1 + real)(1 + inflation)

Approximation is nominal = real + inflation.

Forward premium or discount

Forward premium = (forward - spot) / spot

Interpret based on quote convention.

BA II Plus Keystrokes

Use percent-change arithmetic.
Use STO/RCL to avoid quote-convention mistakes.
Use growth-factor multiplication for exact Fisher calculations.

Worked Example

Real rate = 2 percent and inflation = 3 percent.
Nominal = (1.02 x 1.03) - 1 = 5.06 percent.
The approximation gives 5 percent.

Common Mistakes

Applying the Fisher approximation when the exact relation is requested.
Forgetting imports are subtracted.
Reversing base and price currency.

Related Guides

CFA Level I Economics Calculations - Elasticity, GDP, inflation, exchange rates, and monetary-policy calculations for CFA Level I.
BA II Plus: Effective Annual Rate Step by Step - Calculate effective annual rate from stated annual rate and compounding frequency.
Time Value of Money Calculations on the BA II Plus - CFA Level I TVM reference for present value, future value, annuities, perpetuities, and BA II Plus inputs.