EM1 Examination Blueprint

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					                                           Micro & Macro Economics [EM1] Examination Blueprint
                                                               2010–2011

Purpose

The Micro & Macro Economics [EM1] examination has been constructed using an examination blueprint. The blueprint, also referred to as the test
specifications, outlines the content areas covered on the examination and the weighting allotted to each content area. This document also lists the topics,
the level of competence for each topic, and the related learning objectives. In addition, information is provided on the proportion of each question type
presented in the examination (that is, multiple choice, quantitative problems, and so on).

Use

Students should use the examination blueprint to prepare for the course examination. The blueprint may not include all the topics listed in the course
materials. However, students are still responsible for acquiring a broad-based knowledge of all topics not listed in the blueprint since these topics will be
tested in assignment and review questions. The topics not listed in the blueprint will also provide students with a greater depth of understanding of
economics and its importance in accounting transactions.

Examination Objectives

The objectives of this 3-hour, comprehensive examination are to test CGA students on the prerequisite knowledge that is required for advancement into
the CGA Corporate Finance Fundamentals [FN1] course, as well as to ensure the broad-based knowledge in economics needed to function properly in
upper-level education and certification courses.

Examination Guidelines for Questions

        Question Type
        The following are guidelines on the type of questions and their approximate weightings:

                    Question Item                                     Percentage Weighting
                 Multiple-choice questions                                100%


        Question Content
        The following table is organized according to content area and provides information on topics, learning objectives, weighting, and levels of
        competence.




Examination sessions: March 2011; June 2011; September 2011                                                                                  Page 1 of 11
    Micro & Macro Economics [EM1] Examination Blueprint

Content Area                                   Topics            Learning Objectives                                        Weighting       Levels of
                                                                                                                              (%)          Competence
1. Introduction to the study of economics                                                                                    10% to
                                                                                                                              14%

                     1.1 What is economics?                      Describe economics and the economic way of thinking.                     Level 1

                     1.2 Making and using graphs                 Distinguish between positive and negative relationships                  Level 2
                                                                 in graphical form.

                     1.3 The production possibilities frontier   Explain the concept, shape, and expansion of the                         Level 1
                                                                 production possibilities frontier.

                     1.4 Demand                                  Explain the law of demand, the demand curve, and                         Level 1
                                                                 changes in demand versus changes in the quantity
                                                                 demanded.

                     1.5 Supply                                  Explain the law of supply, the supply curve, and changes                 Level 1
                                                                 in supply versus changes in the quantity supplied.


                     1.6 Price determination                     Explain the concept of equilibrium price.                                Level 1

                     1.7 Understanding graphs in economics       Display changes in demand and supply curves                              Level 1
                                                                 graphically.




Examination sessions: March 2011; June 2011; September 2011                                                                             Page 2 of 11
Content Area                                   Topics         Learning Objectives                                             Weighting      Levels of
                                                                                                                                (%)         Competence
2. Elasticity and price regulation                                                                                             8% to
                                                                                                                                12%

                       2.1 Price elasticity of demand         Explain the concept of price elasticity, the factors that                   Level 1
                                                              influence elasticity, and the calculation of price elasticity
                                                              of demand.

                       2.2 Other elasticities of demand       Define and calculate cross elasticity of demand and                         Level 2
                                                              income elasticity of demand.

                       2.3 Price elasticity of supply         Explain the concept of price elasticity of supply.                          Level 1

                       2.4 Consumer and producer surpluses    Define producer surplus and consumer surplus.                               Level 2

                       2.5 Price regulation                   Explain the impact of price ceilings, price floors, and sales               Level 1
                                                              tax on the market.

                       2.6 Economics and ethics               Identify key ethical issues that relate to markets.                         Level 1




Examination sessions: March 2011; June 2011; September 2011                                                                               Page 3 of 11
Content Area                                    Topics                 Learning Objectives                                       Weighting    Levels of
                                                                                                                                   (%)       Competence
3. Production costs                                                                                                               6% to
                                                                                                                                   10%

                      3.1 The firm’s economic problem                  Define the components of cost from an economist’s point               Level 1
                                                                       of view.

                      3.2 Efficiency of firms                          Define economies of scale and economies of scope. .                   Level 1


                                                                       Define and graphically illustrate the firm’s short-run                Level 1
                      3.3 The firm’s constraints and short-run costs   product and cost curves, and describe the constraints.

                                                                       Explain long-run costs and economies of scale.                        Level 2
                      3.4 Economies of scale and long-run costs




Examination sessions: March 2011; June 2011; September 2011                                                                                  Page 4 of 11
Content Area                                  Topics                        Learning Objectives                                              Weighting       Levels of
                                                                                                                                               (%)          Competence
4. Market structures: Competition and monopoly                                                                                                8% to
                                                                                                                                               12%

                       4.1 Types of market structure                        Distinguish among the various types of market structure.                      Level 1


                       4.2 Perfect competition                              Explain the pricing and profit strategies of a competitive                    Level 1
                                                                            firm.

                       4.3 Other aspects of perfect competition             Explain the long-run situation in a competitive industry.                     Level 2


                       4.4 Monopoly                                         Explain how a monopoly determines its price and level of                      Level 1
                                                                            output.

                       4.5 Price discrimination and other monopoly issues   Explain the concepts of price discrimination and rent seeking.                Level 1

                       4.6 Monopoly regulation                              Describe the various forms of monopoly regulation.                            Level 2




Examination sessions: March 2011; June 2011; September 2011                                                                                              Page 5 of 11
Content Area                                    Topics                        Learning Objectives                                            Weighting       Levels of
                                                                                                                                               (%)          Competence
5. Market structures: Monopolistic competition and oligopoly; wage rate determination                                                         8% to
                                                                                                                                               12%

                        5.1   Definition of monopolistic competition and      Define monopolistic competition and oligopoly
                              oligopoly                                                                                                                   Level 1
                                                                              .
                        5.2   Price, output, and efficiency in monopolistic   Explain how price and output are determined in a
                              competition                                     monopolistically competitive industry.                                      Level 1

                        5.3   Price/profit strategies of firms in an          Explain the pricing strategies of a firm in an oligopolistic                Level 1
                              oligopolistic industry                          industry.

                        5.4   Wage rate determination                         Describe the process of wage rate determination.                            Level 1




Examination sessions: March 2011; June 2011; September 2011                                                                                              Page 6 of 11
Content Area                                  Topics                 Learning Objectives                                         Weighting       Levels of
                                                                                                                                   (%)          Competence
6. Introduction to macroeconomic indicators                                                                                       8% to
                                                                                                                                   12%



                        6.1 Gross domestic product                   Explain the derivation of gross domestic product.                        Level 1



                        6.2 The unemployment rate                    Define the four labour market indicators derived from the
                                                                     Labour Force Survey.                                                     Level 1

                        6.3 Inflation and the Consumer Price Index   Describe the problems that inflation creates for an
                                                                     economy.                                                                 Level 1

                        6.4 Concept of potential GDP                 Explain how potential GDP increases.                                     Level 1




Examination sessions: March 2011; June 2011; September 2011                                                                                  Page 7 of 11
Content Area                                   Topics                        Learning Objectives                                         Weighting       Levels of
                                                                                                                                           (%)          Competence
7. Money, banking and interest rates                                                                                                      8% to
                                                                                                                                           12%

                        7.1 The market for loanable funds                    Explain the factors that influence the demand and supply
                                                                             for loanable funds.                                                      Level 1

                        7.2 Government impact on the loanable funds market   Explain the impact of the government’s financial position
                                                                             on the loanable funds market.                                            Level 2

                        7.3 Definition of money                              Define the money supply in Canada.                                       Level 1

                        7.4 The banking system and money creation            Explain how the banking system creates money.                            Level 1

                        7.5 Determination of interest rates                  Explain how interest rates are determined.                               Level 1




Examination sessions: March 2011; June 2011; September 2011                                                                                          Page 8 of 11
Content Area                                      Topics      Learning Objectives                                         Weighting       Levels of
                                                                                                                            (%)          Competence
8. Expenditure decisions                                                                                                   10% to
                                                                                                                            14%

                           8.1 Aggregate supply               Explain which factors cause a shift in or movement along                 Level 1
                                                              the SAS and the LAS curves.

                           8.2 Aggregate demand               Explain which factors cause a shift in or movement along
                                                              the AD curve.                                                            Level 1

                           8.3 Macroeconomic equilibrium      Describe the impact that changes in SAS, LAS, and AD
                           8.4 Expenditure plans              have on equilibrium GDP.                                                 Level 1

                                                              Examine how changes in the level of aggregate planned
                                                              expenditures (AE) influence the equilibrium level of real
                           8.5 The multiplier                 GDP.                                                                     Level 1

                                                              Define and calculate the size of the fiscal multiplier.                  Level 1




Examination sessions: March 2011; June 2011; September 2011                                                                           Page 9 of 11
Content Area                                    Topics                  Learning Objectives                                          Weighting       Levels of
                                                                                                                                       (%)          Competence
9. Unemployment and inflation                                                                                                         8% to
                                                                                                                                       12%
                       9.1 Inflation cycles                             Distinguish between demand-pull and cost-push inflation.                  Level 1

                       9.2 The Phillips curve                           Differentiate between the short run and the long-run                      Level 2
                                                                        Phillips curves.

                       9.3 Fiscal Policy                                Explain how fiscal policy impacts the equilibrium level of                Level 1
                                                                        real GDP.

                       9.4 Other multipliers                            Explain the difference between the government expenditure                 Level 1
                                                                        multiplier and the autonomous tax multiplier.

                       9.5 Monetary policy                              Describe the tools used by the Bank of Canada to alter the                Level 1
                                                                        growth of the money supply.

                       9.6 Comparison of monetary and fiscal policies   Describe the similarities and differences between monetary                Level 1
                                                                        and fiscal policies.




Examination sessions: March 2011; June 2011; September 2011                                                                                      Page 10 of 11
Content Area                                     Topics                      Learning Objectives                                          Weighting       Levels of
                                                                                                                                            (%)          Competence
10. The global environment                                                                                                                 6% to
                                                                                                                                            10%

                       10.1 Comparative advantage and gains from trade       Explain the principle of comparative advantage and why all
                                                                             countries can gain from international trade.                              Level 1

                       10.2 Other trade topics                               Explain the impact of trade restrictions.                                 Level 1

                       10.3 Balance of payments accounts                     Describe a country’s balance of payments accounts.                        Level 1

                       10.4 Foreign exchange markets                         Explain how the foreign exchange value of the Canadian
                                                                             dollar is determined.                                                     Level 1

                       10.5 Thoughts beyond the text: Ethics and economics   Give examples of ethical issues facing economists.                        Level 1




Examination sessions: March 2011; June 2011; September 2011                                                                                           Page 11 of 11

				
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