The candidate should be able to demonstrate knowledge of microeconomic and macroeconomic principles.

The next study sessions introduce fundamental microeconomic and macroeconomic concepts relevant to financial analysis and investment management. Microeconomic factors such as a firm’s competitive (or non-competitive) environment and its pricing strategy may be critical inputs for cash flow forecasting and bottom up security selection approaches. Economic output, global trade flows, monetary and fiscal policies, and the business cycle are key considerations for conducting top own investment analysis and economic forecasting.

Candidates should be familiar with the material covered in the following prerequisite economics readings available in Candidate Resources on the CFA Institute website:

• Demand and Supply Analysis: Introduction

• Demand and Supply Analysis: Consumer Demand

• Demand and Supply Analysis: The Firm