Course :: CFA Level 1- Economics

Unemployment below natural rate, lead to increase in real wages. Increased wages shift SRAS, resulting in new equilibrium of full-employment GDP @ higher prices. If gov’t continues fiscal or monetary policies that are increasing AD. Capital deepeningis anincreasein a country’scapital per worker(ie, capital-to-labor ratio).

When workers gain more capital, they traditionally become more productive. However, theneoclassical modelof economic growth states that the per capita production function, which measures capital per worker against output per worker, exhibits diminishing marginal returns. Therefore, when a country has agreater capital-to-laborratio, it will likely see asmaller per capita output increasefrom capital deepening than if it had a lesser capital-to-labor ratio, all else equal. The topic readings focus on foreign exchange concepts and theories of exchange rate determination.

Always review the MCQs at the end of each chapter of the CFAI. The CFA Economics topic has a weighting of 5-10% of the total does minocycline cause weight loss exam content. The Level 3 CFA exam contains 8-11 constructed response questions and 44 multiple-choice questions.

Furthermore, purely domestic portfolios are not exempt from the influences of globalization, making an understanding of foreign exchange critical for any financial analyst. Contractionary fiscal policy (reducing government spending and/or increasing taxes) helps control inflation in a high growth economy. MC does NOT intersect AFC at min b/c AFC decreases as production increases due to allocation of fixed costs. The share of output paid to capital (α) is the elasticity of output with respect to capital. A 1% increase in capital will increase output by α%, calculated as the ratio of capital income (ie, Marginal product of capital × Amount of capital) to output .

The videos signpost the reading contents, explain the concepts and provide additional context for specific concepts. The fun light-hearted analogies are also a welcome break to some very dry content. I usually watch the videos before going into more in-depth reading and they are a good way to avoid being overwhelmed by the sheer volume of content when you look at the readings. Real exchange rate adjusts the nominal exchange rate for inflation in each country compared to a base period. Nominal exchange rate is the quoted currency exchange rate at any point in time. Both Veblen good and Giffen good have upward sloping demand curves, but for different reasons.

Macroeconomics is the study of aggregate economic activity, typically applied to entire nations. This may be the sum of all business expenditures, total consumption, the overall level of interest rates, etc. Analysis of such variables is critical in the analysis of a nation’s aggregate output and income, labor productivity, inflation rates, competitive advantages, etc.

Assuming no change in the money wage rate, an increase in the price level will cause the quantity of real GDP that is supplied to increase, resulting in a movement along the same SRAS. Also, increase in Demand will result in a greater quantity supplied hence movement along the same SAS. Economics is a central topic on all three levels of the CFA examinations that requires some effort to study, particularly the exchange rate segment, whether you have a finance or economics background. The topic readings cover the process of setting capital market expectations for specific asset classes and cases demonstrating the uses of macroeconomic analysis.

Furthermore, candidates will learn about important tools for conducting economic analysis. The reading also covers alternative exchange rate regimes and how exchange rates influence a country’s imports, exports, and capital flows. Covers supply and demand analysis for consumers and firms. Introduces the various market environments in which companies compete. Later readings discuss macroeconomic principles and the effect of the business cycle on economic activity.

Watching these cleared up many of the unclarities I had in my head. Very well explained and gives a great insight about topics in a very short time. Learning Economics concepts can be a little bit like learning a new board game.