CFA_1级_02_经济学_2023最新

CFA, 1级，2023，经济学，内容有： L1 Topics in Demand and Supply Analysis； L2 The Firm and Market Structures； L3 Aggregate Output, Prices, and Economic Growth； ... ...

Economics

L1 Topics in Demand and Supply Analysis

Demand Analysis

Basic Concepts

Demand

Willingness

Ability

Given price

Las of Demand

price+ -> buy-

Demand function

Q = f(Px, I, Py, ...)

Demand curve

graph of inverse demand function

Movements

Change in market price

Shifts

Change in indenpendent variable

Consumer surplus

difference between highest price willing to pay and actual price

Demand Elasticity

Price Elasticity of Demand

Elastic: |E| > 1

Unit Elastic: |E| = 1

Inelastic: |E| < 1

Income Elasticity of Demand

Normal goods: positive income elasticity

Normal luxuries goods: high positive elasticity

Necessities: low positive elasticity

Inferior goods:negative income elasticity

Cross-Price Elasticity of Demand

Substitutes: positive cross-price elasticity

Complements: negative cross-price elasticity

Substitution and Income Effect

Substitution Effect

price decrease together

Income Effect

price decrease -> real purchasing power increase

Supply Analysis

Basic Concepts

Production Function

Profits

Accounting profit = total revenue - accounting costs (explicit costs)

Economic profit = total revenue - total economic costs = total revenue - explicit costs - implicit costs = accounting profit - implicit costs

Normal profit is the accounting profit that makes economic profit zero

Revenue

Cost

Perfect Competition & Imperfect Competition

Perfect Competition

no impact on market price (price taker)

identical products

horizontal demand curve

Imperfect Competition

price maker

downward-sloping demand curve

Profit Maximization

Marginal revenue (MR) = marginal cost (MC)

Short-Run Equilibrium for Perfect Competition

P = MR = MC

Long-Run Equilibrium for Perfect Competition

P = MR = MC = ATC

Zero economic profits

Shutdown and Breakdown Point

Breakeven Point

Total revenue (TR) = total cost (TC)

Average total cost (ATC) =price (P)

Shutdown Points

Short-run shutdown point: average revenue(AR) = average variable cost (AVC)

Long-run shutdown point: average revenue (AR) equals average total cost (ATC)

Summary

AR >= ATC, firm stay

ATC > AR >= AVC, firm stay in the short run, but will exit in the long run

AR < AVC, firm shut down in the short run and exit in the long run

Economies of Scale

The minimum point on the LRATC (long run average total cost)

Economies of scale

lower cost structures when it grows in size

Reasons

Increasing returns to scale

Division oflabor

More-expensive, but more-efficient equipment

Effectively reducing waste and lowering costs

Making better use of market information

Discounted price on resources

Diseconomies of Scale

less efficient with size

Reasons

Decreasing returns to scale

Management inefficiency

Overlap and duplication of business functions

Higher resource prices

L2 The Firm and Market Structures

Perfect Competition

Characteristics

large number of buyers and sellers

products are identical

no barriers to entry and exit

no market-pricing power (price taker)

Non-price competition is absent

Short/Long Run Equillibrium

MC = MR = D = AR = P = ATC

Supply Function

Monopolistic Competition

Characteristics

large number of buyers and sellers

differentiated products

free to enter and exit

some pricing power

differentiate their products through advertising and other non-price strategies

Equilibrium

MC = MR

P = ATC

Monopolistic Competition vs Perfect Competition

Demand curves: Monopolistic competition: downward-sloping, highly elastic; Perfect competition: horizontal

Product differentiation: monopolistic competition: yes

Economic profits: no for both

Long-run equilibrium quantity: monopolistic competition: less than optimal

Oligopoly

Features of Oligopoly

Characteristics

A small number of potential sellers

Products close or differentiated

Entry into the market is difficult

Substantial pricing power

Products are highly differentiated

Kinked Demand Curve Model

Assumption: An increase will not be followed but a decrease will

Result: Elasticity of demand is greater when price increases than decreases

Simple Models for Game Theory

Nash Equillibrium

Cournot Model

Stackelberg Model

Dominant firm (DF): determining the market price as a monopoly company, when MR=MC

Other competitive firms (CF) take market price as given

If the other companies undercut the price, the market share of the dominant firm will increase ultimately

Over time, the dominant company's market share tends to decrease

Monopoly

Features of Monopoly

Characteristics

Single seller

product has no close substitute

Entry into the market is very difficult

Considerable pricing power

Non-price strategies such as advertising

Gobernment Interference

Average cost pricing: P = ATC, no economic profit

Marginal cost pricing: P = MC, government subsidy

Industry Concentration Measures

N firms concentration ratio (CRn)

Method: sum of the market shares of the largest N firms

Limitations

doesn't show the potential entry threat

less affected by mergers

doesn't consider the elasticity of demand

Herfindahl-Hirschman Index (HHI)

Method: sum of the squared market share of each firm

Limitations

doesn't show the potential entry threat

doesn't consider the elasticity of demand

Price Discrimination

First-degree: each customer the highest price

Consumer surplus reduced to zero

Second-degree: quantity based pricing

Third-degree: customers are segregated

L3 Aggregate Output, Prices, and Economic Growth

GDP

Definition

Definition: Gross domestic product (GDP) is the total market value of the goodsand services produced in a country within a certain time period

Key points of GDP

In a country

In a given period of time

Newly goods and services produced

Final goods and services

Market value

Exclusions

Sale or resale of goods produce in precious period

Transfer payments made by the government

In-process goods

The value of labor not sold

Underground economy

Value of Final Output and Sum of Value Added Method

Nominal GDP & Real GDP

Nominal GDP is measured by current prices

Real GDP is measured by constant prices

GDP Deflator

GDP deflator > 100 -> current price > constant price -> inflation

GDP deflator < 100 -> current price < constant price -> deflation

Measurement

Concepts

Aggregate Output (AO): The value of all the goods and services produced in a specified period of times

Aggregate Income (Al): The value of all the payments earned by the suppliers of factors used in the production of goods and services

Aggregate Expenditure (AE): The total amount spent on the goods and services produced in the domestic economy during the period

AO = AI = AE

Using the Expenditure Approach

GDP

GDP = C+I + G+(X-M)

C: Consumer spending on final goods and services

I: Gross private domestic investment (e.g., plant and equipment) and changes in inventory (inventory investment)

G: Government spending on final goods and services

X: Exports

M:lmports

GDP = Gross domestic income (GDI) = Net domestic income + Consumption of fixed capital (CFC)+Statistical discrepancy = National Income + Capital consumption allowance (CCA) + Statistical discrepancy = Consumer spending on final goods and services+ Domestic private sector savings + Net taxes

GDP = National Income + CCA + SD

CCA (capital consumption allowance): depreciation of the capitastock that occurs in the production of goods and services

SD (statistical discrepancy): the difference between two methodsto calculate GDP

GDP = C + S + T

C: Consumer spending on final goods and services S: Domestic private sector savings T: Net taxes

NI

= employees'wages and benefits + corporate and government enterprise profits pre-tax +unincorporated business owners'income +interestincome + rent +indirect business taxes - subsidies

PI

=National income - Indirect business taxes - Corporate income taxes - Undistributed corporate profits + Transfer payments

Personal disposable income = Personal income - Personal tax

Marginal Propensity

Marginal propensity to consume (MPC)

The proportion of additional disposable income spent onconsumption

Marginal propensity to saving (MPS)

The proportion ofadditional disposable income spent on savings

MPC+MPS =1

Using the Income Approach

Equillibrium

Aggregate Demand Curve

Three Effects to Explain the Downward Slope of AD Curve

Factors that Shift the Aggregate Demand

Aggregate Supply Curve

VSRAS / SRAS / LRAS

Factors that Shift the Short-Run / Long-Run Aggregate Supply

Macro-Equilibrium

Four Phenomena

Long-Run Equilibrium

Recessionary Gap

Inflationary Gap

Stagflation

Combined Effects

Economic Growth

Gobb Douglas Model

Sources of Economic Growth

Sustazinable Growth Model

Understanding Business Cycle

Theories of Business Cycles

Business Cycle and Credit Cycle

Types of Business Cycle

Different Phases in Business Cycle

Credit Cycle

Business Cycle Fluctuations

Different Schools of Business Cycles

Unemployment

Measures of Unemployment

Unemployment Rate

Participation Ratio

Types of Unemployment

Inflation

Inflation Measurements

Inflation and Deflation

Indices Used to Measure Inflation

CPI & PPI

Cost-Push Inflation & Demand-Pull Inflation

Economic Indicators

Leading Indicators

Coincident Indicators

Lagged Indicators

Monetary and Fiscal Policy

Monetary Policy

Money

Functions and Definitions of Money

Money Creation Process

Fisher Effect

Central Bank

Qualities of Effective Central Banks

Policy Targeting of Central Bank

Cost of Inflation

Monetary Policy Tools

Tools

Monetary Transmission Mechanism

Neutral Interest Rate

Limitation of Monetary Policy

Fiscal Policy

Fiscal Policy Tools

Tools

Multiplier

Forms

Discretionary

Automatic

Implementation of Fiscal Policy

Concerned about National Debt

Limitations of Discretionary Fiscal Policy

Interaction of Monetary Policy and Fiscal Policy

Introduction to Geopolitics

Brief Introduction of Geopolitics

State Actors and Non-state Actors

Political Cooperation and Political Non-Cooperation

Globalization

Potential Gains

Potential Drawbacks

Archetypes of Country Behavior

Tools of Geopolitics

National Security Tools

Economic Tools

Financial Tools

Geopolitical Risk

Types of Geopolitical Risk

Event Risk

Exogenous Risk

Thematic Risk

Assessing Geopolitical Threats

Acting on Geopolitical Risk

International Trade and Capital Flows

Terminology

Terms of Trade

GDP and GNP

Comparative Advantage

Absolute Advantage & Comparative Advantage

Sources of Comparative Advantage

Ricardian Model

Heckscher-Ohlin Model

Trade and Capital Restriction

Objectives of Capital / Trading Restrictions

Types of Trazde Restrictions

Welfare Analysis

Balance of Payments

Accounts of BOP

Nationsal Economic Accounts and Balance of Payments

Cooperation and Trade Organization

Cooperation

International Organizations

Currency Exchange Rate

FX Rates

Quotation

Nominal / Real Exchange Rate

Currency Appreciation or Depreciation

Cross-Rate Calculation

Forward Rate & Interest Rate Parity

Forward Discount or Premium

Forward Quotation

Interest Rate Parity

FX Markets and Currency Regime

Functions of FX Markets

Participants in FX Markets

Currency Regimes

FX Rate and Trade Balance

Elasticities Approach

J-Curve Effect

Absorption Approach