### This midterm will be held partially online using Respondus LockDown Browser and Respondus Monitor, and also have a take-home component

• Online - you are allowed a pencil and sheet of paper
• A calculator will be embedded
• You should include this in your “environment check” at the start of the quiz recording
• The take home exam will require you to scan and upload a single PDF. Apps are listed here - Scanning Apps

### Some materials to study

• Go back through readings & terms for all chapters related to modules and video lectures 1-7 (lecture 0 is not specifically on exam)
• Review CQ1, CQ2, CQ3, CQ4, CQ5, CQ6, CQ7, 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
• 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
• Review FW0-7 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: $PV=\frac{FV}{(1+i)^n}$
• Rule of 70
• The economic takeoff-role of technology & institutions
• Inequality within & between countries over time
• 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
• 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
• New Chapter for banking please read!!!
• 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