Mega terms

Question 1

effective annual rate

Answer 1

(1+stated rate/m)^m - 1

Question 2

Present Value of perpetuity

Answer 2

PMT/(I/Y)

Question 3

Geometric Mean

Answer 3

((1+R1)(1+R2)(1+R3)…(1+RN))^1/n

Question 4

Harmonic Mean

Answer 4

N/Summation(1/Xi)

Question 5

Mean Absolute Deviation

Answer 5

(Summation|Xi-X(mean)|)/n

Question 6

Population Variance

Answer 6

Summation (Xi-mean)^2/N

Question 7

Sample Variance

Answer 7

Summation (Xi-mean)^2/(N-1)

Question 8

Chebyshev’s inequality

Answer 8

1-(1/k^2)

Question 9

CV

Answer 9

Standard Deviation of x/Average value of x

Question 10

P(A|B)

Answer 10

P(AB) = P(A|B) * P(B) = P(B|A) * P(A)

Question 11

P(A or B)

Answer 11

P(A) + P(B) - P(AB)

Question 12

Cov1,2

Answer 12

(Summation(Rt,1-R1)(Rt,2-R2))/(n-1)

Question 13

Var(Rp)

Answer 13

wiwjCov(Ri,Rj)

Question 14

Choosing when order doesn’t matter from subset r

Answer 14

n!/(n-r)!r!

Question 15

Choosing when order does matter from subset r

Answer 15

n!/(n-r)!

Question 16

For discrete uniform distribution

Answer 16

P(X=x) = (n!/((n-x)!x!))p^(x)(1-p)^(n-x)

Question 17

SFRatio

Answer 17

E(Rp)-RT/stdevp

Question 18

CI when variance is known and unknown

Answer 18

Z when variance is known t when variance is unknown

Question 19

Type I error

Answer 19

the rejection of the null hypothesis when it is actually true. The alpha is P(Type I error)

Question 20

Type II error

Answer 20

the failure to reject the null hypothesis when it is actually false False negative and power of test is 1-P(Type II)

Question 21

paired T-test

Answer 21

t = (x1-x2)/((s^2p/n1)+(s^2p/n2))^1/2 where s^2p=(n1-1)s1^2 + (n2-1)s2^2 / (n1+n2-2)

Question 22

Degrees of freedom for t-test

Answer 22

((s1^2/n1)+(s2^2/n2))^2/((s1^2/n1)^2/n1) + (s2^2/n2)^2/n2)

Question 23

When to use a t-test

Answer 23

to test if two independent or dependent populations have equal means and when populations are normally distributed

Question 24

When to use Chi-Squared test and F-test

Answer 24

To test one population variance use Chi-square and for two populations use F-statistic

Question 25

How do you calculate elasticity

Answer 25

% change in quantity demanded/(% change in price/related good/income)

Question 26

Breakeven quantity of product

Answer 26

P=ATC and TR=TC

Question 27

When should it shut down

Answer 27

TR < TC (long run) TR < TVC (short run)

Question 28

Order firms from most competetive to least competetive

Answer 28

Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly

Question 29

Real GDP

Answer 29

Quantity produced in year t times price of good in year t-5

Question 30

GDP

Answer 30

Consumption + Business Investment + Government Purchases + (Exports-Imports)

Question 31

Shifts in the Aggregate Demand Curve

Answer 31

1. Increase in consumers’ wealth 2. Business expectations 3. Consumer expectation of future income 4. High capacity utilization 5. Expansionary monetary policy 6. expansionary fiscal policy 7. Exchange rate 8. global economic growth

Question 32

Shifts in SR Aggregate Supply Curve

Answer 32

1. Labor Productivity 2. Input Prices 3. Expectations of future output prices 4. Taxes and government subsidies 5. Exchange rates

Question 33

Shifts in the Long-Run Aggregate Supply Curve

Answer 33

1. Increase in the supply and quantity of labor 2. increase in the supply of natural resources 3. Increase in the stock of physical capital 4. Technology

Question 34

Production function

Answer 34

Y = A x f(L, K)

Question 35

Growth in potential GDP

Answer 35

Growth in labor force + growth in labor productivity

Question 36

Growth in potential GDP

Answer 36

Growth in technology + WL(growth in labor) + WC(Growth in Capital)

Question 37

Neoclassical model

Answer 37

Shifts are driven by technology, and the economy tends toward full employment

Question 38

Keynesian school/New

Answer 38

Shifts are due to business expectations/Input prices are sticky

Question 39

Monetarist

Answer 39

Due to the amount of money supply

Question 40

New classical

Answer 40

Real Business Cycle Theory

Question 41

Money Multiplier

Answer 41

1/reserve requirement

Question 42

Fisher Effect

Answer 42

Rnom = Rreal + E[I]

Question 43

Current Spending vs. Capital Spending

Answer 43

Refers to government purchases of goods and services on an ongoing basis vs. temporary spending on infrastructure

Question 44

Fiscal Multiplier

Answer 44

1/1-MPC(1-t)

Question 45

Opportunity Cost

Answer 45

OC of a = Output of B/Output of A whoever has the least OC

Question 46

Current Account

Answer 46

Merchandise and Services, Income Receipts, and Unilateral Transfers

Question 47

Capital Account

Answer 47

Capital Transfers, Sales and Purchase of non-Financial Assets

Question 48

Financial Account

Answer 48

Government owned assets abroad and Foreign-owned assets in the country

Question 49

Real Exchange Rate

Answer 49

Nominal Exchange Rate x (CPI Base currency/CPI Price Currency)

Question 50

Forward Exchange Rate

Answer 50

Forward/Spot = (1 + interest rateprice)/(1+ interest ratebase currency)

Question 51

Marshall Lerner

Answer 51

Wxex+WM(em-1) > 0 x=exports m=imports

Question 52

Equation of Exchange

Answer 52

Money Supply x Velocity = price x Real Output

Question 53

corr1,2

Answer 53

Cov1,2/(stdev1*stdev2)

Question 54

continuously compounded return

Answer 54

CCR = ln (1+HPR) = ln (ending value/beginning value)

Question 55

When to use the t-test

Answer 55

When population variance is unknown and either normal or nonnormal

Question 56

Substitution vs. Income effect

Answer 56

Substitution of x for y and income effect for the amount that is left. Substitution is always positive income can be positive or negative

Question 57

GDP Budget

Answer 57

G-T = (S-I)-(X-M)

Question 58

Richardian vs. H-O model

Answer 58

one factor of production (labor) vs. two factors of production (capital and labor)