CFA Level 1 - Economics questions and answers
2026\2027 A+ Grade
Price Elasticity of Demand Formula
- correct answer (% Change in Quantity Demanded) / (%t Change in Price)
Cross Elasticity of Demand Formula
- correct answer (% Change in Quantity Demanded) / (% Change in Price of Substitute or Complement)
Income Elasticity of Demand Formula
- correct answer (% Change in Quantity Demanded) / (% Change in Income)
Price Elasticity of Supply Formula
- correct answer (% Change in Quantity Supplied) / (% Change in Price)
Elasticity of Demand Factors
- correct answer 1) Availability of Substitute; 2) Relative amount of income spent on the good; 3) Time
SINCE price change
Elasticity of Supply Factors
- correct answer 1) Available substitutes for resources (inputs) used to produce the goods; (2) the time
that has elapsed since the price change
Income elasticity of an Inferior Good- Positive or Negative
- correct answer Negative
Total Cost Formula
- correct answer = Total Fixed Cost + Total Variable Cost
Average Fixed Cost Formula
- correct answer Average Fixed Cost = TFC/Q
,Average Variable Cost Formula
- correct answer Average Variable Cost= TVC/Q
Average Total Cost Formula
- correct answer = AFC + AVC
Unemployment Rate Formula
- correct answer (Number of Unemployed) / (Labor Force) x 100
Labor Force Participation Rate Formula
- correct answer (Labor Force) / (Working-Age Population(16 or older) ) x 100
Employment to Population Ratio Formula
- correct answer (Number of Employed) / (Working-Age Population) x 100
CPI Formula
- correct answer (Cost of Basket of Current Prices) / (Cost of Basket at Base Period Prices) x 100
Inflation Rate Formula
- correct answer % change in CPI
(Current CPI- Year Ago CPI)/ (Year Ago CPI) X 100
Potential Deposit Expansion Multiplier Formula
- correct answer = 1 / (required reserve ratio)
Potential Increase In Money Supply Formula
- correct answer = (Potential Deposit Expansion Multiplier) x (Increase in Excess Reserves)
Money Multiplier for a change in monetary base Formula
- correct answer (1+c) / (d+c)
c = currency as a % of deposits
, d = desired reserve ratio
Change in Quantity of Money Formula
- correct answer (Change in Quantity of Money) = (Change in Monetary Base) x (Money Multiplier)
Equation of Exchange Formula
- correct answer = (Money supply) x (Velocity) = GDP = (Price) x (Real Output)
Quantity Theory of Money Formula
- correct answer Price = M (V/Y)
What does it mean if Cross elasticity is positive
- correct answer Two goods are reasonable substitutes for each other
What does it mean if Price Elasticity of Demand is less than one in absolute value?
- correct answer Inelastic
What does it mean if Price Elasticity of Demand is greater than one in absolute value?
- correct answer Elastic
Normal Goods Elasticity
- correct answer Positive Income Elasticity (greater than 1)
Total Revenue Test
- correct answer Estimate elasticity of demand:
P Up-> R Up (Inelastic);
P Up -> D Down (Elastic)
Cross Elasticity of Substitutes- Positive or Negative
- correct answer Positive
2026\2027 A+ Grade
Price Elasticity of Demand Formula
- correct answer (% Change in Quantity Demanded) / (%t Change in Price)
Cross Elasticity of Demand Formula
- correct answer (% Change in Quantity Demanded) / (% Change in Price of Substitute or Complement)
Income Elasticity of Demand Formula
- correct answer (% Change in Quantity Demanded) / (% Change in Income)
Price Elasticity of Supply Formula
- correct answer (% Change in Quantity Supplied) / (% Change in Price)
Elasticity of Demand Factors
- correct answer 1) Availability of Substitute; 2) Relative amount of income spent on the good; 3) Time
SINCE price change
Elasticity of Supply Factors
- correct answer 1) Available substitutes for resources (inputs) used to produce the goods; (2) the time
that has elapsed since the price change
Income elasticity of an Inferior Good- Positive or Negative
- correct answer Negative
Total Cost Formula
- correct answer = Total Fixed Cost + Total Variable Cost
Average Fixed Cost Formula
- correct answer Average Fixed Cost = TFC/Q
,Average Variable Cost Formula
- correct answer Average Variable Cost= TVC/Q
Average Total Cost Formula
- correct answer = AFC + AVC
Unemployment Rate Formula
- correct answer (Number of Unemployed) / (Labor Force) x 100
Labor Force Participation Rate Formula
- correct answer (Labor Force) / (Working-Age Population(16 or older) ) x 100
Employment to Population Ratio Formula
- correct answer (Number of Employed) / (Working-Age Population) x 100
CPI Formula
- correct answer (Cost of Basket of Current Prices) / (Cost of Basket at Base Period Prices) x 100
Inflation Rate Formula
- correct answer % change in CPI
(Current CPI- Year Ago CPI)/ (Year Ago CPI) X 100
Potential Deposit Expansion Multiplier Formula
- correct answer = 1 / (required reserve ratio)
Potential Increase In Money Supply Formula
- correct answer = (Potential Deposit Expansion Multiplier) x (Increase in Excess Reserves)
Money Multiplier for a change in monetary base Formula
- correct answer (1+c) / (d+c)
c = currency as a % of deposits
, d = desired reserve ratio
Change in Quantity of Money Formula
- correct answer (Change in Quantity of Money) = (Change in Monetary Base) x (Money Multiplier)
Equation of Exchange Formula
- correct answer = (Money supply) x (Velocity) = GDP = (Price) x (Real Output)
Quantity Theory of Money Formula
- correct answer Price = M (V/Y)
What does it mean if Cross elasticity is positive
- correct answer Two goods are reasonable substitutes for each other
What does it mean if Price Elasticity of Demand is less than one in absolute value?
- correct answer Inelastic
What does it mean if Price Elasticity of Demand is greater than one in absolute value?
- correct answer Elastic
Normal Goods Elasticity
- correct answer Positive Income Elasticity (greater than 1)
Total Revenue Test
- correct answer Estimate elasticity of demand:
P Up-> R Up (Inelastic);
P Up -> D Down (Elastic)
Cross Elasticity of Substitutes- Positive or Negative
- correct answer Positive
