CB2 Business Economics
Microeconomics and macroeconomics applied to insurance, pensions, and financial services markets.
About CB2
CB2 gives actuaries the economic framework to understand the markets and regulatory environments in which they work. Why do interest rates affect insurance pricing? Why does economic growth matter for pension funding? Why is insurance prone to market failure? CB2 answers these questions and makes you a better communicator with economists, regulators, and non-actuarial colleagues.
Who is this for?
Often taken alongside or after CB1. Students interested in regulatory roles, pensions, or macroeconomic analysis benefit most. Students with economics A-level or BCom background find this paper more straightforward.
Complete Syllabus
- Consumer theory: utility maximisation, indifference curves, Slutsky equation, demand curves
- Firm theory: production functions, cost curves, profit maximisation, shutdown decision
- Market structures: perfect competition, monopoly, oligopoly, Bertrand and Cournot models
- Market failure: externalities, public goods, information asymmetry, adverse selection, moral hazard
- Insurance economics: regulation justification, adverse selection in health markets, no-claims discounts
- National income accounting: GDP, GNP, consumption function, multiplier effects
- Keynesian macroeconomics: IS-LM model, aggregate demand and supply, output gaps
- Monetary policy: central bank tools, interest rate transmission mechanism, QE
- Fiscal policy: government spending, automatic stabilisers, Ricardian equivalence
- International economics: exchange rate regimes, purchasing power parity, balance of payments
Career Outcomes
Regulatory Actuary, Pensions Consultant (economics component), Chief Actuary (long-term)
₹4–7 LPA with CB2 cleared alongside CM papers
The information asymmetry and market failure sections overlap heavily with real insurance problems. Understanding adverse selection in theory makes the insurance application questions much easier.
“I was surprised how much CB2 content came up in my interviews. Questions about moral hazard in health insurance, regulatory capital, all from this paper. S.MONK made economics interesting for the first time.”