Midterm 2 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 4, 5, 6, 7 and 8, as well as what was covered in lecture 9
- Review CQ4, CQ5, CQ6, CQ7, and CQ8 paying close attention to the problems you did poorly on as a group. These numbers are listed below:
- CQ4: #1, #8, #9, #13, & #14
- CQ5: #8, #9, #11, #16, #19, #22, #25, #26, #32
- Please note the answer to the second part of #32 should be 40%/5 years = 8%. The correct answer is not there.
- CQ6: #9, #11, #12, #15, #16
- CQ7: #6, #7, #11, #15, #16
- CQ8: #4, #9, #14, #17
- Review FW4, FW5, FW6, FW7, FW8 and FW9 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.
- Firm structure & information issues (principal-agent, asymmetric information)
- Moral hazard & adverse selection
- Stock pricing and returns,
- $\frac{Div_1}{i-g}$ or
- $P=\frac{\text{Future Price}+\text{Dividends}}{(1+i)}$
- $\text{Div Yield}=100\times \frac{\text{Div}}{\text{Price}}$
- Bond pricing and returns
- $\frac{C_1}{(1+i)^1}+\frac{C_2}{(1+i)^2}+\ldots+\frac{C_n}{(1+i)^n}+\frac{F}{(1+i)^n}$
- Relationship between interest rates and bond/stock prices
- GDP calculation (nominal and real)
- Growth rates of real GDP (finding annual averages)
- Calculating inflation with GDP deflators and CPIs, $\text{GDP Deflator}=\frac{NGDP}{RGDP}\times 100$
- Calculating CPIs
- Adjusting prices/wages to compare “real” values at various points in time (forwards and back)
- Anticipated v. Unanticipated inflation
- Calculate growth of real prices/wages
- Supply and demand, manipulating curves and comparative statics
- Surplus v. shortage
- Basic understanding of price floors and ceilings
- Understanding of market failure and externalities
- Total savings, $(S_\text{total}=Y-C-G-NX)$
- OR $(S_\text{total}=S_\text{public}+S_\text{private}+S_\text{foreign}=I)$
- Components of savings
- National savings, $(S_\text{national}=Y-C-G)$
- Foreign savings, $(S_\text{foreign}=-NX)$
- Public savings, $(S_\text{public}=T-G-TR)$
- Private savings, $(S_\text{private}=Y+TR-T-C)$
- The components of GDP, $Y=C+I+G+NX$
- Economic v. financial investment
- Trade deficit v. Trade surplus v. Balanced Trade
- Fisher equation, $r=i-\pi$
- Market failure - rival/non-rival, excludable/non-excludable
- Public goods, externalities, and missing markets
- Foreign trade, tariffs and quotas
- Watch videos listed underneath Lectures 4-8