1st Hourly Review Guidelines

1. What is the Definition of Gross Domestic Product?
2. What are the four components of GDP?
3. What is the difference between the nominal and real GDP?
4. What is the GDP deflator?
5. What do we mean by potential GDP?
6. What is the Consumer Price Index (CPI) in words?
7. What is the formula for calculating the CPI?
8. What is the inflation rate? How is it calculated?
9. Write down the growth rate form of the production function.
10. What does each of the components mean?
11. What is the consumption formula ? ( C = ?)
12. Write down the per capita consumption identity.
13. What is labor productivity? Why is it important?
14. How can we increase per capita consumption in the long run?
15. What are the determinants of productivity?
16. Write down the relevant formula.
17. What is Total Factor Productivity?
18. What is convergence? What is conditional convergence?
19. Why poor countries fail to converge? For what reasons?
20. Complete: Y = ___ + ___ + ___ + ___
21. What is national savings? What is private savings? (formula)
22. Draw the market for loanable funds. What determines demand & supply?
23. What is the crowding out effect? Show and explain on a diagram.
24. How do firms expand / make new investments? (4 ways)
25. What is the present discounted value? Write down the two formulas
26. What if we have a different interest rate every year?
27. What do we mean by “risk aversion”? Show on the utility diagram.
28. What is arbitrage?
29. What is the efficient market hypothesis?
30. What is the connection between the two?
31. What are bonds?
32. How do we estimate the price of a bond?
33. What happens to the price when the interest rate is above/below the coupon rate?
34. Why?
35. What is the bond yield?
36. What is a call option?
37. What is a put option?
38. When does the buyer of a call option benefit?
39. When does the seller of a call option benefit?
40. When does the buyer of a put option benefit?
41. When does the seller of a put option benefit?
42. How do we price a call/put option?
43. What is financial leverage?
44. What is the natural rate of unemployment?
45. What is cyclical unemployment?
46. How do we define the labor force?
47. How do we calculate the unemployment rate?
48. How do we calculate the labor force participation rate?
49. What is frictional unemployment?
50. What is structural unemployment?
51. Why is there structural unemployment? (3 reasons)
52. What does the theory of efficiency wages say?
53. What were the main points of Prof Campbell’s Lecture?
54. List some possible barriers to arbitrage?
55. Why is the efficient market hypothesis violated in the 3Com/Palm example?
56. What is value investing? Momentum strategy?