Midterm 1 will be held in our regular classroom at the regular time

  • Bring a pencil
  • Bring a calculator
  • You are not allowed outside paper

Some materials to study

  • Go back through readings & terms for all chapters related to lectures 1-3 (lecture 0 is not specifically on exam)
  • Review CQ1, CQ2, and CQ3 paying close attention to the problems listed below:
    • CQ1: #5, 13
    • CQ2: #8, 24, 27, 28, 29, 30, 31, 32, 33, 34
    • CQ3: #5, 10, 11, 15, 16, 17
  • Review FW1, FW2, and FW3 for more help
  • Get a good grasp on the big questions. The exam is not limited to this, but these are the major point value questions.
    • Opportunity cost, comparative and absolute advantage
    • Cost benefit & decisionmaking
    • Factors of production
    • Production function & difference between total product, marginal product, and average product
    • Efficiency v. Equity
    • Positive v. Normative
    • GDP (nominal, real, potential, and per capita measures)
    • Growth v. cycle
    • Rate of change equation: $\%\Delta=\frac{New-Old}{Old}\times 100$
    • Compound growth equation: $PV=\frac{FV}{(1+i)^n}$
    • The economic takeoff-role of technology & institutions
    • Inequality within & between countries over time
    • Gini coefficients & Lorenz curves - can you draw and solve???
    • Phases of business cycle
    • Fiscal v. Monetary policy
    • Labor market statistics: unemployment rate (U-3 or official): $\frac{\text{unemployed}}{\text{unemployed+employed}}$
    • Labor market statistics: unemployment rate (U-6): $\frac{\text{unemployed+involuntary part time+discouraged & marginally attached}}{\text{unemployed+employed+discouraged & marginally attached}}$
    • Labor market statistics: labor force participation rate: $\frac{\text{unemployed+employed}}{\text{working-age population}}$
    • Labor market statistics: employment to population ratio: $\frac{\text{employed}}{\text{working-age population}}$
    • Types of unemployment: frictional, structural, & cyclical
    • Natural rate of unemployment
    • Okun’s Law: $\frac{Y-Y^*}{Y^*}=-2(u-u^*)$
    • Price level, inflation, deflation, disinflation, accelerating inflation (and how to calculate given data)
    • Budget deficit/surplus v. debt
    • Trade deficit/surplus/balanced
    • Fisher equation: $r=i-\pi$
    • Money’s functions
    • Assets & wealth v. income, net income, & savings: which are stocks & flows?
    • Monetary aggregates: $\text{M0}=\text{Reserves}+\text{Currency & coins in circulation}$
    • Monetary aggregates: $\text{M1}=\text{Currency & coins in circulation}+\text{Deposits}+\text{Travelers Checks}$
    • Monetary aggregates: $\text{M2}=\text{M1}+\text{Savings (MMDA)}+\text{MMMF}+\text{Small-denominated time deposits (CDs)}$
    • Balance sheets: $\text{assets}=\text{liabilities}+\text{net worth}$
    • Importance of capital requirements & reserve requirements
    • Leverage ratio
    • Fed & its structure (who is chair?) and the FOMC structure
    • Central bank tools, targets, & goals
    • Review and practice problems calculating unemployment rates, inflation rates, interest rates and GDP growth rates
    • Experimental Chapter for banking please only read after other materials

Labor force statistics & Okun’s Law

Compound growth & growth rates

Gini coefficients & Lorenz curves

Bank balance sheets & money creation