### This midterm will be held in person

• You are allowed a pencil or pen and are allowed to write on the exam.
• You will be required to use a pencil to bubble in your answers.
• A calculator will be required but you cannot use your phone or computer.
• No outside paper allowed.

### Some materials to study

• Go back through readings & terms for all chapters related to modules and video lectures 1-4 (lecture 0 is not specifically on exam)
• Review CQ1, CQ2, CQ3, CQ4 paying close attention to the problems listed below:
• CQ1: #7, 13
• CQ2: #8, 10, 20, 24, 27, 28, 29, 30, 31, 32, 33, 34
• CQ3: #5, 10, 11, 15, 17
• CQ4: #8, 11, 13, 14 and closely review #1, 4, 5, 6, 7
• Review FW0-4 and VQ2 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
• Listen to podcast related to motivation for trade
• Rate of change equation: $\%\Delta=\frac{New-Old}{Old}\times 100$
• Same as $\%\Delta=\left(\frac{New}{Old}-1\right)\times 100$
• Compound growth (a.k.a. present value or future value) equation: $PV=\frac{FV}{(1+i)^n}$
• Rule of 70 (or 72)
• 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)
• 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: $\text{M2}=\text{M1}+\text{Savings (MMDA)}+\text{MMMF}+\text{Small-denominated time deposits (CDs)}$
• What happens to M1/M2 if we change Savings (MMDA) to M1?
• 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
• Firm structure & information issues (principal-agent, asymmetric information)
• 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