The Final Exam will be held in your regular classroom
 When is my final exam?
 Bring a pencil
 Bring a calculator
 You are not allowed outside paper
First, look at midterm 1 and midterm 2 study guides. All that material is fair game for the exam.
Some materials to study (new material)
 Review Midterm 1, questions 1, 5, 8, 10, 15, 17, 18, 19, 20, 21, 24, 27, 28
 Review Midterm 2, questions 2, 4, 6, 7, 8, 10, 12, 13, 22, 25, 29, 30
 Go back through readings & terms for all chapters related to lectures 10, 11 & 12 (we skipped number 9)
 Review CQ10, CQ11 and CQ12 paying close attention to the problems you did poorly on as a group. These numbers are listed below:
 CQ10: #1115
 CQ11: #3, #10, #12, #15#18, #22
 CQ12: #1, #3, #4, #5, #9, #14, #18, #19

Review FW10, FW11, and FW 12 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.
 Understand marginal revenue product and the demand for labor and capital
 Calculating unemployment rates
 Structural, cyclical, frictional, natural
 U3 v. U6
 Labor force participation rates
 Understanding Okun’s Law, and what is meant by output gaps and cyclical unemployment
 Production functions and diminishing marginal product of capital & labor
 Also know how to calculate and interpret productivity functions
 Importance of technology v. additions of capital or labor
 Spending Allocation model
 Difference of shares in nongovernment (sensitive to interest rates) v. government share (not sensitive to interest rates)
 How this model helps us determine “neutral interest rates”
 How things like optimisim, increased/decreased government spending, or increased/decreased taxes will impact interest rates
 How interest rates affect exchange rates
 Aggregate Expenditure model
 Understand mpc and the consumption function (“what is disposable income?”)
 Understand what the fiscal/spending multiplier is, and how to find it
 Know how to sketch the Keynesian Cross diagram
 How do you identify output gaps? Can these persist at equilibrium?
 How could you use government policy (tax or spending) to eliminate any output gaps?
 The Economic Fluctuations model
 How to sketch out the AD line. What are the axes? Why does the line slope downward?
 What is the IA line? Why will it tend to return to the value it should be at in the longrun?
 What is the Fed’s role in pushing the economy back to this longrun inflation rate?
 How does a change in government spending or taxation impact the AD line in the shortrun, and what do we expect in the longrun?
Equations
$ \%\Delta=\frac{newold}{old}\times 100 $
$ PV=\frac{FV}{(1+i)^n}$ with $ i $ in decimal form
$ \text{approx time to double}=\frac{70}{g} $
$ r=i\pi $ where $\pi$ is the rate of inflation
$ Y=C+I+G+NX $
$ S_{public}=TGTR $, $S_{private}=Y+TRTC$, $S_{national}= S_{public}+S_{private}$
$ S_{total}=S_{public}+S_{private}+S_{foreign} $
$ S_{foreign}=NX $
$ 1= C/Y + I/Y + G/Y + NX/Y $
$ \frac{NG}{Y^{*}}=1\frac{G}{Y^{*}} $
$ \frac{YY^{*}}{Y^{*}}=2(uu^{*}) $ with $ u \text{ and } u^{*} $ in decimal form OR
$ 100 \times \frac{YY^{*}}{Y^{*}}=2(uu^{*}) $ with $ u \text{ and } u^{*} $ in percentage form
$ PAE=C+I^p+\bar{G}+\bar{NX}$
$ Y=PAE \text{ @ } Y^e$
$ \frac{1}{1mpc} $
$ Y=AK^{0.5}L^{0.5} $
$ \frac{Y}{L}=A \left(\frac{K}{L}\right)^{0.5} $
$ \text{U3 Unemployment}=100 \times\frac{\text{unemployed}}{\text{unemployed+employed}} $
$ \text{Labor Force Participation}=100 \times\frac{\text{unemployed+employed}}{\text{population}} $
$ \text{GDP Deflator}=\frac{\text{Nominal GDP}}{\text{Real GDP}} \times 100 $
Help on Lectures 912
 ShowMe: Production Functions
 Google Docs: Production Function Spreadsheets
 Google Docs: Practice Problems with answers. (Login to Google to “Save a copy” or Download to Excel)
 Educreations: AE Model
 ShowMe: AE Model
 ShowMe: Solving for your multipliers
 Keynesian Cross Diagram from the Wolfram Demonstrations Project by Fiona Maclachlan
 Google Docs: AE Model without “r”. (Login to Google to “Save a copy” or Download to Excel)
Old material
 Understand interest rates (real and nominal).
 What is the difference between real, nominal, potential, and actual GDP?
 What growth rates are we usually interested in and how are they measured?
 What are the different types of unemployment (i.e., U3, U6, frictional, structural, cyclical, natural, and actual) and how that might relate to measures like the labor force participation rate and the employment to population ratio?
 How are unemployment, inflation, and GDP are related and what role does the government, Fed or FOMC play in managing these relationships?
 What is the difference between a debt and a deficit? What is a stock variable and what is a flow variable?
 Who is the Fed or FOMC? What do they do? When do they do it? Why do they do it?
 How do macroeconomic variables change during recessionary and expansionary periods?
 What is a recessionary or expansionary period?
 The relationship between real and nominal wages or prices and why we do these adjustments?
 What is the difference between production, output, productivity, or GDP?
 What is the difference between an export, an import, a trade deficit, trade surplus?
 What is the difference between a government dollar spent and a dollar of government revenue? What is a budget deficit or budget surplus?
 Stock pricing and returns
 Bond pricing and returns
 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
 Calculating CPIs
 Adjusting prices/wages to compare “real” values at various points in time (forwards and back)
 Calculate growth of real prices/wages
 Supply and demand, manipulating curves and comparative statics
 Basic understanding of price floors and ceilings
 Understanding of market failure and externalities
 National, foreign, and total savings
 The components of GDP
 Economic v. financial investment