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 headphones allowed.
- No outside paper allowed.
Some materials to study
- Go back through readings & terms for all chapters related to modules and video lectures 1-3 (lecture 0 is not specifically on exam)
- Review CQ1, CQ2, and CQ3 paying close attention to the problems listed below:
- CQ1: #1, 7, 11, 13
- CQ2: #8, 10, 20, 24, 27, 28, 29, 30, 31, 32, 33, 34
- CQ3: #5, 10, 11, 15, 17
- Review FW0-4 and VQ2 for more help. Yes, please review FW4, as some questions may show up on the test based on what is covered on Tuesday.
- 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
- Watch video “Planet Money Makes a T-Shirt”.
- 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) $\frac{70}{g\text{ in percent}} = \text{Approximate time to double}$
- 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)
- 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
- New Chapter for banking please read!!!
- Firm structure & information issues (principal-agent, asymmetric information)
- Moral hazard & adverse selection
- Gini coefficients & Lorenz curves - can you draw and solve???
- Still to be discussed in class on Tuesday, prepare for:
- 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
HELP on Capital & Labor Markets and Unemployment
HELP on Banks and Lending