First off, I’m very sorry to hear that you have to do this thing again. I’m also sorry about the late response—I managed to pass last year, so the details aren’t so fresh in my mind but I think I can remember enough of how I prepared for the section. The good news is that if you are having trouble with economics, I think it is one area that you can get control of. Conceptually, it is not one of the hardest. I think that the biggest problem with that section is that it is massive—it is one of the largest in terms of the number of pages with the fewest number of points that you can gain. So the real trick is to boil that material down into the key points.
So you have to guess what is testable in that twisting mass of material. First, I would pull out any formula in the chapter—they’re all fair game no matter how small or insignificant one seems. I remember I made a list of formulas from that chapter that was one of the largest in the whole curriculum. But it’s obviously a lot more than just formulas. For example, in the 2007 test there was a question that was essentially asking nothing more than how to calculate the EBIT margin for an index. That question was actually a fraction of a large chapter on projecting the value of an index. The meaning of the chapter in its entirety was not tested—just that one point concerning the EBIT margin, so that’s what I mean about trying to boil things down to filter out what are the quantitative things that they can test. There is also a lot of qualitative material there that is very difficult to test and that isn’t where your focus should be. I think you also have to have the details down of the indicators section, even though it’s tedious and unlikely to be tested. I seem to remember that the 2008 test did ask a very specific question about how certain indicators functioned. The section about analysts’ biases is also fair game. That can be tricky because some of the terminology repeats the behavioral section and sometimes the terminology seems to diverge, so I think it is good to try to separate them if possible—that is, don’t answer a question on the economics section with something from the behavioral material.
In summary, the readings in Level 3 economics are essentially about strategic allocation (long-term capital market expectations), but that big picture is not what is tested. They will pull out fragments from that big picture, so keep breaking the sprawling material down into smaller, testable units with the formulas as the most basic of those units.