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 47
Some materials to study
 Go back through readings & terms for all chapters related to lectures 4, 5, 6, and 7
 Review CQ4, CQ5, CQ6, and CQ7 paying close attention to the problems you did poorly on as a group. These numbers are listed below:
 CQ4: #8, 11, 13, 14 and closely review #4, 5, 6, 7
 CQ5: #8, #9, #11, #16, #19, #22, #25, #26, #32
 CQ6: #9, #11, #12, #15, #16
 CQ7: #6, #7, #11, #15, #16
 Review FW4, FW5, FW6, and FW7 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.
 Fisher Equation: $r=i\pi$
 Rate of change equation $\frac{\text{New}\text{Old}}{\text{Old}} \times 100 = \frac{\text{New}}{\text{Old}}1 \times 100 = \%\Delta$
 Stock pricing and returns,
 $\frac{Div_1}{ig}$ or
 $P=\frac{\text{Future Price}+\text{Dividends}}{(1+i)}$
 $\text{Div Yield}=100\times \frac{\text{Div}}{\text{Price}}$
 Compound growth (a.k.a. present value or future value) equation: $PV=\frac{FV}{(1+i)^n}$
 Bond pricing and returns
 Really just a repeated application of compound growth equation from above
 For an “n” period bond
 $\frac{C_1}{(1+i)^1}+\frac{C_2}{(1+i)^2}+\ldots+\frac{C_n}{(1+i)^n}+\frac{F}{(1+i)^n}$
 Relationship between interest rates and bond/stock prices
 Rule of 70 (or 72)
 Price level, inflation, deflation, disinflation, accelerating inflation (and how to calculate given data)
 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
 Budget deficit v. Budget surplus v. Balanced budget
 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, $(S_\text{public}=TGTR)$ (similar to budget situation)
 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, understanding diagrams manipulating curves and comparative statics
 Surplus v. shortage
 Basic understanding of price floors and ceilings
 Knowing how to solve a system of two equations (supply and demand)

Nominal v. Real equation and how to use it
 Watch videos listed underneath Lectures 47
 Excel Spreadsheet: Present Value Worksheet: Microsoft Excel.
 Google Doc: Present Value Worksheet: Google Doc, (Login to Google to “Save a copy” or Download to Excel)
 Educreations: Bond Pricing and Returns. (Must be logged in as a JMU student)
 Camtasia: Bond Pricing and Returns
 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)
 Handout on Wage Adjustments