CFA 2019 - Level 1 SchweserNotes Book 2

193 Pages·2019·4.323 MB·English

by  Kaplan,Schweser

Contents
1. Learning Outcome Statements (LOS)
2. Study Session 4—Economics (1)
1. Reading 14: Topics in Demand and Supply Analysis
1. Exam Focus
2. Module 14.1: Elasticity
3. Module 14.2: Demand and Supply
4. Key Concepts
5. Answer Key for Module Quizzes
2. Reading 15: The Firm and Market Structures
1. Exam Focus
2. Module 15.1: Perfect Competition
3. Module 15.2: Monopolistic Competition
4. Module 15.3: Oligopoly
5. Module 15.4: Monopoly and Concentration
6. Key Concepts
7. Answer Key for Module Quizzes
3. Reading 16: Aggregate Output, Prices, and Economic Growth
1. Exam Focus
2. Module 16.1: GDP, Income, and Expenditures
3. Module 16.2: Aggregate Demand and Supply
4. Module 16.3: Macroeconomic Equilibrium and Growth
5. Key Concepts
6. Answer Key for Module Quizzes
4. Reading 17: Understanding Business Cycles
1. Exam Focus 83
2. Module 17.1: Business Cycle Phases
3. Module 17.2: Inflation and Indicators
4. Key Concepts
5. Answer Key for Module Quizzes
3. Study Session 5—Economics (2)
1. Reading 18: Monetary and Fiscal Policy
1. Exam Focus
2. Module 18.1: Money and Inflation
3. Module 18.2: Monetary Policy
4. Module 18.3: Fiscal Policy
5. Key Concepts
6. Answer Key for Module Quizzes
2. Reading 19: International Trade and Capital Flows
1. Exam Focus
2. Module 19.1: International Trade Benefits
3. Module 19.2: Trade Restrictions
4. Key Concepts
5. Answer Key for Module Quizzes
3. Reading 20: Currency Exchange Rates
1. Exam Focus
2. Module 20.1: Foreign Exchange Rates
3. Module 20.2: Forward Exchange Rates
4. Module 20.3: Managing Exchange Rates
5. Key Concepts
6. Answer Key for Module Quizzes
4. Topic Assessment: Economics
5. Topic Assessment Answers: Economics
6. Formulas
List of pages
1. v
2. vi
3. vii
4. viii
5. 1
6. 2
7. 3
8. 4
9. 5
10. 6
11. 7
12. 8
13. 9
14. 10
15. 11
16. 12
17. 13
18. 14
19. 15
20. 16
21. 17
22. 18
23. 19
24. 20
25. 21
26. 22
27. 23
28. 24
29. 25
30. 26
31. 27
32. 28
33. 29
34. 30
35. 31
36. 32
37. 33
38. 34
39. 35
40. 36
41. 37
42. 38
43. 39
44. 40
45. 41
46. 42
47. 43
48. 44
49. 45
50. 46
51. 47
52. 48
53. 49
54. 50
55. 51
56. 52
57. 53
58. 54
59. 55
60. 56
61. 57
62. 58
63. 59
64. 60
65. 61
66. 62
67. 63
68. 64
69. 65
70. 66
71. 67
72. 68
73. 69
74. 70
75. 71
76. 72
77. 73
78. 74
79. 75
80. 76
81. 77
82. 78
83. 79
84. 80
85. 81
86. 82
87. 83
88. 84
89. 85
90. 86
91. 87
92. 88
93. 89
94. 90
95. 91
96. 92
97. 93
98. 94
99. 95
100. 96
101. 97
102. 98
103. 99
104. 100
105. 101
106. 102
107. 103
108. 105
109. 106
110. 107
111. 108
112. 109
113. 110
114. 111
115. 112
116. 113
117. 114
118. 115
119. 116
120. 117
121. 118
122. 119
123. 120
124. 121
125. 122
126. 123
127. 124
128. 125
129. 126
130. 127
131. 128
132. 129
133. 130
134. 131
135. 132
136. 133
137. 134
138. 135
139. 136
140. 137
141. 138
142. 139
143. 140
144. 141
145. 142
146. 143
147. 144
148. 145
149. 146
150. 147
151. 148
152. 149
153. 150
154. 151
155. 152
156. 153
157. 154
158. 155
159. 156
160. 157
161. 159
162. 160
163. 161
164. 162
165. 163
166. 164
167. 165
168. 166
169. 167
170. 168
171. 169
172. 170
173. 171
174. 172
175. 173
176. 174
177. 175
178. 176
179. 177
180. 178
181. 179
182. 180
183. 181
184. 182
185. 183
186. 184
187. 185
188. 186
LEARNING OUTCOME STATEMENTS (LOS)
STUDY SESSION 4
The topical coverage corresponds with the following CFA Institute assigned reading:
14. Topics in Demand and Supply Analysis
The candidate should be able to:
a. calculate and interpret price, income, and cross-price elasticities of demand and
describe factors that affect each measure. (page 1)
b. compare substitution and income effects. (page 7)
c. distinguish between normal goods and inferior goods. (page 7)
d. describe the phenomenon of diminishing marginal returns. (page 8)
e. determine and interpret breakeven and shutdown points of production. (page 10)
f. describe how economies of scale and diseconomies of scale affect costs. (page 13)
The topical coverage corresponds with the following CFA Institute assigned reading:
15. The Firm and Market Structures
The candidate should be able to:
a. describe characteristics of perfect competition, monopolistic competition,
oligopoly, and pure monopoly. (page 19)
b. explain relationships between price, marginal revenue, marginal cost, economic
profit, and the elasticity of demand under each market structure. (page 22)
c. describe a firm’s supply function under each market structure. (page 42)
d. describe and determine the optimal price and output for firms under each market
structure. (page 22)
e. explain factors affecting long-run equilibrium under each market structure. (page
22)
f. describe pricing strategy under each market structure. (page 42)
g. describe the use and limitations of concentration measures in identifying market
structure. (page 43)
h. identify the type of market structure within which a firm operates. (page 44)
The topical coverage corresponds with the following CFA Institute assigned reading:
16. Aggregate Output, Prices, and Economic Growth
The candidate should be able to:
a. calculate and explain gross domestic product (GDP) using expenditure and income
approaches. (page 51)
b. compare the sum-of-value-added and value-of-final-output methods of calculating
GDP. (page 52)
c. compare nominal and real GDP and calculate and interpret the GDP deflator. (page
53)
d. compare GDP, national income, personal income, and personal disposable income.
(page 54)
e. explain the fundamental relationship among saving, investment, the fiscal balance,
and the trade balance. (page 56)
f. explain the IS and LM curves and how they combine to generate the aggregate
demand curve. (page 58)
g. explain the aggregate supply curve in the short run and long run. (page 62)