CFA Level 1 Economics Core Course: Understand Core Concepts

Learning Outcomes for Learning Module 2: Understanding Business Cycles

• Describe the business cycle and its phases.

• Describe credit cycles.

• 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 Outcomes for Learning Module 3 : Fiscal Policy

• Compare monetary and fiscal policy.

• Describe the roles and objectives of fiscal policy as well as arguments as to whether the size of a national debt relative to GDP matters.

• Describe tools of fiscal policy, including their advantages and disadvantages.

• Explain the implementation of fiscal policy and difficulties of implementation as well as whether a fiscal policy is expansionary or contractionary.

Learning Outcomes for Learning Module 4: Monetary Policy

• Describe the roles and objectives of central banks.

• 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.

• Describe the 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.

• Explain the interaction of monetary and fiscal policy.

Learning Outcomes for Learning Module 5: Introduction to Geopolitics

• Describe geopolitics from a cooperation versus competition perspective.

• Describe geopolitics and its relationship with globalisation.

• Describe the functions and objectives of the international organisations that facilitate trade, including the World Bank, the International Monetary Fund, and the World Trade Organisation.

• Describe geopolitical risk.

• Describe tools of geopolitics and their impact on regions and economies.

• Describe the impact of geopolitical risk on investments.

Learning Outcomes for Learning Module 6: International Trade

• Describe the benefits and costs of international trade.

• Compare types of trade restrictions, such as tariffs, quotas, and export subsidies, and their economic implications.

• Explain motivations for and advantages of trading blocs, common markets, and economic unions.

Learning Outcomes for Learning Module 7: Capital Flows and the FX Market

• 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.

• Describe exchange rate regimes and explain the effects of exchange rates on countries’ international trade and capital flows.

• Describe common objectives of capital restrictions imposed by governments.

Learning Outcomes for Learning Module 8: Exchange Rate Calculations

• Calculate and interpret currency cross-rates.

• 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.