CFA Level 1 Study Notes – Economics

CFA Level 1 Study Notes – Economics

Older Curriculums

2024/2025, 2025/2026 Curriculums

Learning Module 1 – The Firm and Market Structures

LOS a: determine and interpret breakeven and shutdown points of production, as well as how economies and diseconomies of scale affect costs under perfect and imperfect competition

LOS b: describe characteristics of perfect competition, monopolistic competition, oligopoly, and pure monopoly

LOS c: explain supply and demand relationships under monopolistic competition, including the optimal price and output for firms as well as pricing strategy

LOS d: explain supply and demand relationships under oligopoly, including the optimal price and output for firms as well as pricing strategy

LOS e: identify the type of market structure within which a firm operates and describe the use and limitations of concentration measures

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Learning Module 2 Understanding Business Cycles

LOS a: describe the business cycle and its phases

LOS b: describe credit cycles

LOS c: describe how resource use, consumer and business activity, housing sector activity, and external trade sector activity vary over the business cycle and describe their measurement using economic indicators

Learning Module 3 – Fiscal Policy

LOS a: compare monetary and fiscal policy

LOS b: describe roles and objectives of fiscal policy as well as arguments as to whether the size of a national debt relative to GDP matters

LOS c: describe tools of fiscal policy, including their advantages and disadvantages

LOS d: explain the implementation of fiscal policy and the difficulties of implementation as well as whether a fiscal policy is expansionary or contractionary

Learning Module 4 – Monetary Policy

LOS a: describe the roles and objectives of central banks

LOS b: describe tools used to implement monetary policy tools and the monetary transmission mechanism, and explain the relationships between monetary policy and economic growth, inflation, interest, and exchange rates

LOS c: describe qualities of effective central banks; contrast their use of inflation, interest rate, and exchange rate targeting in expansionary or contractionary monetary policy; and describe the limitations of monetary policy

LOS d: explain the interaction of monetary and fiscal policy

 

 

Learning Module 5 Introduction to Geopolitics

LOS a: describe geopolitics from a cooperation versus competition perspective

LOS b: describe geopolitics and its relationship with globalization

LOS c: describe functions and objectives of the international organizations that facilitate trade, including the World Bank, the International Monetary Fund, and the World Trade Organization

LOS d: describe geopolitical risk

LOS e: describe tools of geopolitics and their impact on regions and economies

LOS f: describe the impact of geopolitical risk on investments

Learning Module 6 – International Trade

LOS a: describe the benefits and costs of international trade

LOS b: compare types of trade restrictions, such as tariffs, quotas, and export subsidies, and their economic implications

LOS c: explain the motivations for and advantages of trading blocs, common markets, and economic unions

Learning Module 7 – Capital Flows and the FX Market

LOS a: describe the foreign exchange market, including its functions and participants, distinguish between nominal and real exchange rates, and calculate and interpret the percentage change in a currency relative to another currency

LOS b: describe exchange rate regimes and explain the effects of exchange rates on countries’ international trade and capital flows

LOS c: describe common objectives of capital restrictions imposed by governments

Learning Module 8 – Exchange Rate Calculations

LOS a: calculate and interpret currency cross-rates

LOS b: explain the arbitrage relationship between spot and forward exchange rates and interest rates, calculate a forward rate using points or in percentage terms, and interpret a forward discount or premium

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