The Final Exam will be held in our regular classroom at the regular time
 Bring a pencil
 Bring a calculator
 You are not allowed outside paper
 https://www.jmu.edu/registrar/wm_library/1221_spring_exam_schedule.pdf
First, look at the midterm study guides. All that material is fair game for the exam
 This is a comprehensive final exam
 The exam will probably be about 40% new material, and 30% from each midterm
 The grade will be about 1/3 written and 2/3 multiple choice exam
Some materials to study
 Review Canvas Quizzes (CQ): Bold indicates you should take another look
 Note: DO NOT submit any remaining attempts these assignments, as it will convert any grade you had previously received to a zero and thus negatively impact your grade.
 CQ1: #1, 7, 11, 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 #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
 CQ8: #4, ,#5, #8, #9, #14, #17
 CQ9: #9 and #13, but also look at #2, #4, #8, #10
 CQ10: Look over #2, #6, #7, #1115
 CQ12: Review  #3, #4, #5, #8, #9, #12, #14, #21

Review FlatWorld Assignments for more help
 Review Midterm take home questions (updated for spring 2022)
 Midterm 1 Numbers: 1, 5, 6, 7, 10, 17, 20, 21, 24, 27, 28, 29, 30
 Midterm 2 Numbers: 1, 2, 6, 7, 8, 9, 15, 18, 19, 20, 23, 26, 27, 28
 All shortanswer questions from both midterms are fair game
 Go back through readings & terms for all chapters related to lectures
New Material (Units 812)
 Get a good grasp on the big questions. The exam is not limited to this, but this hits on the major point value questions.
 Understand marginal revenue product and the demand for labor and capital
 How do changes in interest rates impact how much capital you might hire?
 How do changes in wages impact how many workers you might hire?
 Production functions and diminishing marginal product of capital & labor
 Also know how to calculate and interpret productivity functions
 Importance of technology v. additions of capital or labor
 Savings and Investment model (discussed as part of Unit 11) helps us determine “neutral interest rates” or the “natural rate of interest”
 This is also known as $r^*$, the interest rate where $Y=Y^*$
 How things like optimism, increased/decreased government spending, or increased/decreased taxes will impact interest rates
 How interest rates affect exchange rates
 Aggregate Expenditure model
 Understand mpc and the consumption function (“what is disposable income?”)
 Know how to sketch the Keynesian Cross diagram
 How do you identify output gaps? Can these persist at equilibrium?
 Know how to use $PAE = C+I^p+G+NX$ and $C=\bar{C}+mpc(Y\bar{T})$
 We also assume that $I^p = \bar{I}, G=\bar{G}, NX = \bar{NX}$ such that the “bar” means exogenous
 Exogenous means determined outside of the model
 Find the PAE equation. Typically $PAE = [\bar{C}mpc(\bar{T})+\bar{I}+bar{G}+\bar{NX}]+mpc(Y)$
 Use the equilibrium condition $Y=PAE$ @ $Y^e$ to solve for equilibrium
 Understand what the fiscal/spending multiplier is, and how to find it
 How could you use government policy (tax or spending) to eliminate any output gaps?
 $\Delta Y = \frac{1}{1mpc} \Delta G$
 $\Delta Y = \frac{mpc}{1mpc} \Delta T$
 How would you change interest rates to put the economy in equilibrium at potential (i.e., $Y=Y^*$)
 The Economic Fluctuations model
 How to sketch out the AD line. What are the axes? Why does the line slope downward?
 What is the IA line? Why will it tend to return to the value it should be at in the longrun?
 What is the Fed’s role in pushing the economy back to this longrun inflation rate?
 How does a change in government spending or taxation impact the AD line in the shortrun, and what do we expect in the longrun?
 How does the Fed’s stance on monetary policy impact the AD line in the shortrun, and what do we expect in the longrun?
 Understand marginal revenue product and the demand for labor and capital
Earlier Material
 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 TShirt”.
 Rate of change equation: $\%\Delta=\frac{NewOld}{Old}\times 100$
 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 (U3 or official): $\frac{\text{unemployed}}{\text{unemployed+employed}}$
 Labor market statistics: unemployment rate (U6): $\frac{\text{unemployed+involuntary part time+discouraged & marginally attached}}{\text{unemployed+employed+discouraged & marginally attached}}$
 Labor market statistics: labor force participation rate: $\frac{\text{unemployed+employed}}{\text{workingage population}}$
 Labor market statistics: employment to population ratio: $\frac{\text{employed}}{\text{workingage population}}$
 Types of unemployment: frictional, structural, & cyclical
 Natural rate of unemployment
 Okun’s Law: $\frac{YY^*}{Y^*}=2(uu^*)$
 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: $\text{M2}=\text{M1}+\text{Savings (MMDA)}+\text{MMMF}+\text{Smalldenominated time deposits (CDs)}$
 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 (principalagent, 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,
 $\frac{Div_1}{ig}$ or
 $P=\frac{\text{Future Price}+\text{Dividends}}{(1+i)}$
 $\text{Div Yield}=100\times \frac{\text{Div}}{\text{Price}}$
 Relationship between interest rates and bond/stock prices
 Rate of change equation $\frac{\text{New}\text{Old}}{\text{Old}} \times 100 = \frac{\text{New}}{\text{Old}}1 \times 100 = \%\Delta$
 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
 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
Equations (A Summary)
$ \%\Delta=\frac{newold}{old}\times 100 $
$ PV=\frac{FV}{(1+i)^n}$ with $ i $ in decimal form
$ \text{approx time to double}=\frac{70}{g} $
$ r=i\pi $ where $\pi$ is the rate of inflation
$ Y=C+I+G+NX $
$ S_{public}=TGTR $, $S_{private}=Y+TRTC$, $S_{national}= S_{public}+S_{private}$
$ S_{total}=S_{public}+S_{private}+S_{foreign} $
$ S_{foreign}=NX $
$ 1= C/Y + I/Y + G/Y + NX/Y $
$ \frac{NG}{Y^{*}}=1\frac{G}{Y^{*}} $
$ \frac{YY^{*}}{Y^{*}}=2(uu^{*}) $ with $ u \text{ and } u^{*} $ in decimal form OR
$ 100 \times \frac{YY^{*}}{Y^{*}}=2(uu^{*}) $ with $ u \text{ and } u^{*} $ in percentage form
$ PAE=C+I^p+\bar{G}+\bar{NX}$
$ Y=PAE \text{ @ } Y^e$
$ \frac{1}{1mpc} $
$\Delta Y = \frac{1}{1mpc} \Delta G$
$\Delta Y = \frac{mpc}{1mpc} \Delta T$
$ Y=AK^{0.5}L^{0.5} $
$ \frac{Y}{L}=A \left(\frac{K}{L}\right)^{0.5} $
$\frac{Div_1}{ig}$
$P=\frac{\text{Future Price}+\text{Dividends}}{(1+i)}$
$\text{Div Yield}=100\times \frac{\text{Div}}{\text{Price}}$
$\text{M0}=\text{Reserves}+\text{Currency & coins in circulation}$
$\text{M1}=\text{Currency & coins in circulation}+\text{Deposits}+\text{Travelers Checks}$
$\text{M2}=\text{M1}+\text{Savings (MMDA)}+\text{MMMF}+\text{Smalldenominated time deposits (CDs)}$
$r_{\text{ffr}} = r^* + (\pi_t  \pi^T)$
$\text{assets}=\text{liabilities}+\text{net worth}$
$ \text{EmploymenttoPopulation Ratio}: \frac{\text{employed}}{\text{workingage population}}$
$ \text{U3 Unemployment}=100 \times\frac{\text{unemployed}}{\text{unemployed+employed}} $
$ \text{U6 Unemployment Rate} = 100 \times \frac{\text{unemployed+involuntary part time+discouraged & marginally attached}}{\text{unemployed+employed+discouraged & marginally attached}}$
$ \text{Labor Force Participation}=100 \times\frac{\text{unemployed+employed}}{\text{population}} $
$ \text{GDP Deflator}=\frac{\text{Nominal GDP}}{\text{Real GDP}} \times 100 $
\[\text{Nominal wage}_\text{YR1} \times \frac{\text{CPI}_\text{YR2}}{\text{CPI}_\text{YR1}}=\text{Real wage}_\text{YR2}\]Additional Help Videos
 On my webpage https://aneveu.com/econ200 you will find numerous video help files to help you work through this material. They are arranged by lecture, and you can find the help videos under each corresponding HELP section!