Revise Entire CFA Syllabus in 6 days
Economics

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© EduPristine – www.edupristine.com
Tips-n-Tricks
Economics: has a weight of 10%
• Whenever you get a problem on income effect and substitution effect remembe...
Tips-n-Tricks Contd…
• A Firm:
 Experiences economic losses when P < ATC.

 Is operating at a shutdown point , when P = ...
Tips-n-Tricks Contd…
• Measure of money M2 = M1+ time deposits + saving deposit + money market mutual fund
balances.
 Ple...
Thank You !

help@edupristine.com
www.edupristine.com

© EduPristine

(Confidential)

© EduPristine – www.edupristine.com
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#CFA: Revise entire CFA syllabus 6 days-Economics

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#CFA: Revise entire CFA syllabus 6 days-Economics

  1. 1. Revise Entire CFA Syllabus in 6 days Economics © EduPristine (Confidential) © EduPristine – www.edupristine.com
  2. 2. Tips-n-Tricks Economics: has a weight of 10% • Whenever you get a problem on income effect and substitution effect remember : Income Effect Substitution Effect Normal Goods POSITIVE POSITIVE Giffen Goods POSITIVE negative © EduPristine (Confidential) Effective Case > Income effect Negative substitution effect < Income effect Negative Substitution effect 1
  3. 3. Tips-n-Tricks Contd… • A Firm:  Experiences economic losses when P < ATC.  Is operating at a shutdown point , when P = AVC.  Will minimize its losses in the short run by continuing to operate when AVC < P < ATC since it is covering some of its fixed costs from the difference between P and AVC. • MRP (Marginal revenue product) - Profit maximization quantity of an input "a" is that quantity for which MRP(a) = Price(a). Hence: by employing one more unit of an input the firm can increase profits as long as MRP(a) >Price(a) as the revenue earned from this input is greater than the cost of the input. © EduPristine (Confidential) 2
  4. 4. Tips-n-Tricks Contd… • Measure of money M2 = M1+ time deposits + saving deposit + money market mutual fund balances.  Please notice it includes M1 and all its components .  All currency EXCEPT held at banks + traveler’s checks + checking a/c deposits of individuals and firms. • While doing a problem on employment: DO NOT consider Frictional and Structural Unemployment while calculating full employment (Structural + Frictional = Natural Rate of Unemployment). • NEVER assume that appreciation of currency is equal to depreciation of other. In order to calculate depreciation of foreign currency, the indirect quote is needed to be converted to direct quote. © EduPristine (Confidential) 3
  5. 5. Thank You ! help@edupristine.com www.edupristine.com © EduPristine (Confidential) © EduPristine – www.edupristine.com
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