### 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 $Y=AK^{0.5}L^{0.5}$
• 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
• 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
• 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