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: #9, #13, & #14 , and while you did OK on these other questions, please review (#1, #4, #5, #6, #7, #8, #11)
CQ5: #5, #8, #9, #11, #15, #16, #19 , #22, #25, #26 , #28, #29, #30, #31, #32
CQ6: #6, #8, #9, #11, #12, #15 , #16
CQ7: #6, #7, #11, #12, #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)
Taxation - progressive, regressive, proportional (flat) and how they relate to effective average tax rate
Effective average tax rate = $\frac{\text{total tax}}{\text{total income}}\times 100$
Moral hazard & adverse selection
Gini coefficients & Lorenz curves - can you draw and solve???
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) \(\text{Nominal wage}_\text{YR1} \times \frac{CPI_\text{YR2}}{CPI_\text{YR1}}=\text{Real wage}_\text{YR2}\)
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
Exchange rates, appreciation, depreciation, strengthen, weaken, and interpret
Watch videos listed underneath Lectures 4-8 (and Gini under Lecture 2)
Google Sheets : Gini Coefficient and Excel version
Camtasia : Gini Calculation
Excel Spreadsheet : Present Value Worksheet:
Microsoft Excel.
Google Doc : Present Value Worksheet: Google Doc , (Login to Google to “Save a copy” or Download to Excel)
Educreations : Bond Pricing and Returns . (Must be logged in as a JMU student)
Camtasia : Bond Pricing and Returns
Educreations : Real GDP, Nominal GDP, and Inflation (CPI) .
Google Docs : Real GDP, Nominal GDP, Inflation (CPI), Unemployment, Indexing, and Adjustment . (Login to Google to “Save a copy” or Download to Excel)
Educreations : Inflation indexing .
Table of data from class
Educreations : Price Floors and Ceilings (Must be logged in as a JMU student)