Everything You Need to Know to Ace the Economics Section of CFA Level 1 Exam 2024

INTRODUCTION

The Economics section is an important part of the CFA Level 1 exam, which requires a solid grasp of economic principles and strong preparation to perform well. It is not easy to excel in this subject; to excel, students need a deep understanding of concepts related to fiscal and monetary policies, market structures, business cycles, international trade, geopolitics and exchange rates. Today in this blog, we will be discussing some effective study strategies and resources to help you prepare for the Economics section of the 2024 CFA Level Exam. We will also find out the learning modules covered in the syllabus and calculate the expected number of questions in the exam. You are on the right page if you are looking for the best Faculty for CFA Level 1 Exam. Let's start without delay.

Learning Modules in the 2024 Curriculum

The Economics section of the 2024 CFA Level 1 exam includes the following learning modules:

1. Firms and Market Structures: These cover market structures such as monopolistic competition, perfect competition, oligopoly & monopoly and cover market efficiency, market behaviour and pricing strategies.
2. Understanding Business Cycles: This module involves studying the nature and characteristics of business cycles, including expansion and contraction. In addition, it helps to uncover the causes and effects of business cycles on economies and investment decisions.
3. Fiscal Policy: This module examines fiscal policy's role in managing an economy's overall health. It includes concepts such as taxation, budget deficit, government spending and their impact on economic growth and stability.
4. Monetary Policy: This includes examining the tools and objectives of monetary policy, such as their impact on the money supply, interest rates, inflation, central bank operations, employment and economic stability.
5. Introduction to Geopolitics: It covers geopolitical events like political stability, trade disputes, economic policies and their impact on financial markets.
6. International Trade: It covers the theory and practice of international trade, like comparative advantage, exchange rates, trade barriers, and effects of globalisation on economies and investment.
7. Capital Flows and FX Market: This includes currency valuation, balance of payments, exchange rate calculations and their impact on investment and international trade, such as the foreign exchange market and currency exchange rates.
8. Exchange Rate Calculation: This module covers topics like international transactions, investments, exchange rate calculation and their applications in financial reporting.

Expected Number of Questions & Weightage of Economics Section in the CFA Level 1 Exam 2024

The Economics section carries a weightage of 6-9% of the total 180 questions in the CFA Level 1 Exam.

To calculate the expected number of questions, we can use the midpoint of the weightage range: (6% + 9%) / 2 = 7.5%.

Expected Number of Questions = 7.5% of 180 questions = 0.075 * 180 = 13.5 questions (rounded to 14 questions)

Minimum Number of Questions = 6% of 180 questions = 0.06 * 180 = 10.8 questions (rounded to 11 questions)

Maximum Number of Questions = 9% of 180 questions = 0.09 * 180 = 16.2 questions (rounded to 16 questions)

Hence, CFA students can expect around 14 questions from the Economics section. The minimum number of questions can be 11, while the maximum can be 16. For your information, let us tell you that the weightage of the Economics section in the CFA Level 1 exam of the year 2023 was 8%-12%.

Tips for Preparing for the Economics Section of the CFA Level 1 Exam

• Understand the Learning Modules: The students must familiarise themselves with the modules mentioned in the syllabus. Try to deeply understand concepts related to business cycles, geopolitics, international trade, fiscal and monetary policies, market structures and exchange rates.
• Access extensive study resources: Apart from textbooks, students can access a wide range of reliable study materials, including online resources and video courses. If you are looking for the best coaching institute for CFA level 1 in India, the Edutors Institute can be your best option. Gaurav Kabra is one of India's reputed faculty for CFA Level 1 who provides excellent video lectures in Hinglish (Hindi+ English). His high-quality video lectures can help you understand complex economic concepts effectively.
• Practice Questions and Mock Tests: Solving mock test papers is the most appropriate way to get familiar with the exam pattern and improve your understanding of economic principles.
• Review and Consolidate: Students should regularly review the material to consolidate their understanding. Make summary notes or flashcards.
• Stay updated with current events: Students must stay updated with global economic news and developments. For this, they can read reputed financial news sources. This will give them practical insight into the application of economic principles.
• Ask for clarification: If you face any problem during your study, you can ask for clarification from teachers, online forums or study groups. Gaurav Kabra's online classes provide quick help to students with clear explanations and comprehensive coverage of economic topics in case of difficulty.
• Time Management and Regular Practice: Students should proceed to study only after developing a study schedule and allot enough time for each learning module. Apart from this, give enough time for the revision as well.

Conclusion

You'll need comprehensive study resources, effective time management, and firm guidance to master the economics section of the 2024 CFA Level 1 exam. You can increase your chances of success by using quality resources like Gaurav Kabra's video classes in Hinglish and practising with a wide variety of questions.