CHRISTOPHER D. PIROS, PhD, CFA, is the Managing Director of Investment Strategy and Chairman of the Investment Policy Committee at Hawthorn, a member of the PNC Financial Services Group, Inc., which is dedicated to serving the needs of individuals and families with investable assets in excess of $20 million. Prior to joining PNC, Mr. Piros served on the team responsible for the curriculum underlying the Chartered Financial Analyst® designation. He also has served as Director of Investment Strategy & Portfolio Management at Prudential Investments LLC, the wealth management services arm of Prudential Financial. He was a global fixed-income portfolio manager and head of fixed-income quantitative analysis at MFS Investment Management.

JERALD E. PINTO, PhD, CFA, is Director, Curriculum Projects, in the education division of the CFA Institute. Prior to joining CFA Institute, he consulted with corporations, foundations, and partnerships in investment planning, portfolio analysis, valuation, and quantitative analysis. Pinto also worked in the investment and banking industries in New York, and taught finance at NYU Stern School of Business. He holds an MBA from Baruch College, a PhD in finance from the Stern School, and is a member of CFA Virginia.

CFA INSTITUTE is a global, not-for-profit organization comprising the world's largest association of investment professionals. With over 100,000 members, and regional societies around the world, CFA Institute is dedicated to developing and promoting the highest educational, ethical, and professional standards in the investment industry. CFA Institute offers a range of educational and career resources, including the Chartered Financial Analyst (CFA) and the Certificate in Investment Performance Measurement (CIPM) designations, and is a leading voice on global issues of fairness, market efficiency, and investor protection.

PART I Learning Outcomes, Summary Overview, and Practice Problems

CHAPTER 1 Demand and Supply Analysis: Introduction 3

Learning Outcomes 3

Summary Overview 3

Practice Problems 5

CHAPTER 2 Demand and Supply Analysis: Consumer Demand 11

Learning Outcomes 11

Summary Overview 11

Practice Problems 12

CHAPTER 3 Demand and Supply Analysis: The Firm 15

Learning Outcomes 15

Summary Overview 15

Practice Problems 16

CHAPTER 4 The Firm and Market Structures 23

Learning Outcomes 23

Summary Overview 23

Practice Problems 24

CHAPTER 5 Aggregate Output, Prices, and Economic Growth 29

Learning Outcomes 29

Summary Overview 29

Practice Problems 32

CHAPTER 6 Understanding Business Cycles 39

Learning Outcomes 39

Summary Overview 39

Practice Problems 41

CHAPTER 7 Monetary and Fiscal Policy 45

Learning Outcomes 45

Summary Overview 45

Practice Problems 47

CHAPTER 8 International Trade and Capital Flows 53

Learning Outcomes 53

Summary Overview 53

Practice Problems 55

CHAPTER 9 Currency Exchange Rates 61

Learning Outcomes 61

Summary Overview 61

Practice Problems 63

CHAPTER 10 Currency Exchange Rates: Determination and Forecasting 67

Learning Outcomes 67

Summary Overview 68

Practice Problems 71

CHAPTER 11 Economic Growth and the Investment Decision 77

Learning Outcomes 77

Summary Overview 77

Practice Problems 79

CHAPTER 12 Economics of Regulation 87

Learning Outcomes 87

Summary Overview 87

Practice Problems 88

PART II Solutions

CHAPTER 1 Demand and Supply Analysis: Introduction 93

Solutions 93

CHAPTER 2 Demand and Supply Analysis: Consumer Demand 97

Solutions 97

CHAPTER 3 Demand and Supply Analysis: The Firm 99

Solutions 99

CHAPTER 4 The Firm and Market Structures 101

Solutions 101

CHAPTER 5 Aggregate Output, Prices, and Economic Growth 103

Solutions 103

CHAPTER 6 Understanding Business Cycles 107

Solutions 107

CHAPTER 7 Monetary and Fiscal Policy 109

Solutions 109

CHAPTER 8 International Trade and Capital Flows 111

Solutions 111

CHAPTER 9 Currency Exchange Rates 115

Solutions 115

CHAPTER 10 Currency Exchange Rates: Determination and Forecasting 119

Solutions 119

CHAPTER 11 Economic Growth and the Investment Decision 123

Solutions 123

CHAPTER 12 Economics of Regulation 127

Solutions 127

About the CFA Program 129