All Macroeconomics Formulas Cheat Sheet (Class 12)

Macroeconomics is 40% theory and 60% logic/formulas. Whether it’s calculating National Income or finding the Investment Multiplier, you need the formulas at your fingertips.

Here is the Master Sheet of every single formula in the Class 12 CBSE Syllabus. Bookmark this page for your last-minute revision.

1. National Income Aggregates

The Conversion Trio

1. Gross = Net + Depreciation
2. National = Domestic + NFIA (Net Factor Income from Abroad)
3. Market Price (MP) = Factor Cost (FC) + NIT (Net Indirect Tax)

2. Methods of Calculating National Income

Value Added Method

• GVA @ MP = Value of Output - Intermediate Consumption
• Value of Output = Sales + Change in Stock

Income Method

• NDP @ FC = Compensation of Employees + Operating Surplus + Mixed Income
• Operating Surplus = Rent + Royalty + Interest + Profit

Expenditure Method

• GDP @ MP = Private Final Cons. Exp + Govt Final Cons. Exp + Gross Domestic Capital Formation + Net Exports

3. Money & Banking

• Money Multiplier = 1 / LRR (Legal Reserve Ratio)
• Total Deposits Created = Initial Deposits × Money Multiplier

4. Income Determination (The Multiplier)

Consumption & Saving Functions

• C = c + b(Y) (where b = MPC)
• S = -c + (1-b)Y (where 1-b = MPS)

Investment Multiplier (k)

• k = 1 / MPS
• k = 1 / (1 - MPC)
• k = ΔY / ΔI

5. Government Budget (Deficits)

1. Revenue Deficit = Revenue Exp - Revenue Receipts
2. Fiscal Deficit = Total Exp - Total Receipts (excluding borrowings)
   • Shortcut: Fiscal Deficit = Borrowings
3. Primary Deficit = Fiscal Deficit - Interest Payments

6. Balance of Payments

• Balance of Trade (Trade Deficit) = Export of Goods - Import of Goods

[Conclusion] Don’t just read these; write them down 5 times. Knowing the formula is half the battle won. For solved numericals, check our Commastery App.