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
 Exam is just on units 58
Some materials to study
 Go back through readings & terms for all chapters related to lectures 5, 6, 7 and 8
 Review CQ5, CQ6, CQ7, and CQ8 paying close attention to the problems you did poorly on as a group. These numbers are listed below:
 CQ5: #8, #9, #11, #16, #19, #22, #25, #26, #32
 CQ6: #9, #11, #12, #15, #16
 CQ7: #6, #7, #11, #15, #16
 CQ8: #4, ,#5, #8, #9, #14, #17
 Review FW5, FW6, FW7, and FW8 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 (principalagent, asymmetric information)
 Moral hazard & adverse selection
 GDP calculation (nominal and real)
 The components of GDP, $Y=C+I+G+NX$
 Definition of net exports $NX = XM$
 Trade deficit v. Trade surplus v. Balanced Trade
 Total savings, $(S_\text{total}=YCGNX)$
 OR $(S_\text{total}=S_\text{public}+S_\text{private}+S_\text{foreign}=I)$
 Components of savings
 National savings, $(S_\text{national}=YCG)$
 Foreign savings, $(S_\text{foreign}=NX)$
 Public savings, $(S_\text{public}=TGTR)$
 Private savings, $(S_\text{private}=Y+TRTC)$
 Economic v. financial investment
 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) SEE BELOW
 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
 Market failure  rival/nonrival, excludable/nonexcludable
 Public goods, externalities, and missing markets
 Foreign trade, tariffs and quotas
 Fisher Equation: $r=i\pi$

Rate of change equation $\frac{\text{New}\text{Old}}{\text{Old}} \times 100 = \frac{\text{New}}{\text{Old}}1 \times 100 = \%\Delta$
 Watch videos listed underneath Lectures 58
 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
 Nominal v. Real practice from class
 The link for Canvas questions (associated slides) (link for answers)
 Educreations: Price Floors and Ceilings (Must be logged in as a JMU student)