Browse CFA Level 1

Chapter 5: International Trade and Capital Flows

Chapter 5: International Trade and Capital Flows (CFA Level 1): Practical explanations of core ideas, with key terms, formulas, and common exam pitfalls.

In this section

  • Comparative Advantage and Gains from Trade
    Comparative Advantage and Gains from Trade (CFA Level 1): Foundations of Comparative vs. Absolute Advantage, Quick Anecdote, and Understanding Opportunity Cost. Key definitions, formulas, and exam tips.
  • Tariffs, Quotas, and Other Trade Barriers
    Tariffs, Quotas, and Other Trade Barriers (CFA Level 1): Key Concepts and Motivations Behind Trade Barriers, Tariffs, and Types of Tariffs. Key definitions, formulas, and exam tips.
  • Trading Blocs and Regional Integration
    Trading Blocs and Regional Integration (CFA Level 1): Key Definitions and Levels of Integration, Free Trade Area (FTA), and Customs Union. Key definitions, formulas, and exam tips.
  • Current Account, Capital Account, and Balance of Payments Composition
    Current Account, Capital Account, and Balance of Payments Composition (CFA Level 1): Structure of the Balance of Payments, Current Account, and Current Account Balance and Economic Interpretation. Key definitions, formulas, and exam tips.
  • Marshall-Lerner Condition and J-Curve
    Marshall-Lerner Condition and J-Curve (CFA Level 1): Marshall-Lerner Condition, Why Elasticities Matter, and Price Elasticities of Exports and Imports. Key definitions, formulas, and exam tips.
  • Levels of Economic Integration
    Levels of Economic Integration (CFA Level 1): Progression of Economic Integration Levels, Preferential Trading Area (PTA), and Free Trade Area (FTA). Key definitions, formulas, and exam tips.
  • Terms of Trade
    Terms of Trade (CFA Level 1): Key Forces Driving Terms of Trade, Global Commodity Prices, and Shifts in Global Demand. Key definitions, formulas, and exam tips.
  • Trade in Services and Global Value Chains
    Trade in Services and Global Value Chains (CFA Level 1): Growth of Services in Modern Trade, Measuring Services Trade, and Rise of Global Value Chains (GVCs). Key definitions, formulas, and exam tips.

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Chapter 4: Inflation and Deflation
Chapter 6: Currency Exchange Rates