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Syllabus The Economics of Money and Banking Instructor: office: phone: office hrs: Dan Zuchegno Econ. 309 492-6875 Tue. 1:00 - 2:00 Tue. 4:00 - 5:00 Textbooks: The Economics of Money, Banking & Financial Markets Frederic S. Mishkin, 1989, Scott Foresman and Co. optional: Study Guide to Economics of Money, Banking, and Financial Markets. Grading: There will be two exams in this course, one midterm exam and a final exam. Each exam will consist of part multiple choice, part problems, and part essay. The midterm exam will account for approximately 30% of the total course grade. The final exam will be comprehensive accounting for approximately 50% of the course grade. There will also be two short exams, quizzes, each accounting for approximately 10% of the course grade. THE course can be broken down into several sections. Section I is an introduction to money and financial markets. This includes an overview regarding the definition and role of money in an economy and a description of the financial market system in the United States. Included is a discussion of the determination of interest rates, their levels and structure. Section II pertains to the structure of the domestic banking system and the process of money creation. Section III discusses the policy tools through which the United States monetary authorities can affect the domestic money supply. Section IV is a detailed macroeconomic study of the relationship between money and economic activity Assignments Section I. Introduction Introduction to Money What is Money; chpt. 1,2 (Mishkin) Financial Markets Overview of the Domestic Financial System; chpt. 3 Theory of Interest Rates; chpt . 4 Asset Demand & Interest Rates; Chpt. S(Opti o nal), 6 The Risk & Term Structure of Interest Rates; chpt.7 Section II. Banking & Financial Institutions Bank Management; chpt. 8 The Banking Industry; chpt . 9 Investment Banking; pp. 222-230 (rest of chpt. 10 is Optional) Financial Innovation & Regulation; chpt. 11 Money Supply Process High Powered Money & Money Multipliers; chpt. 12 Determinants of the Money Supply; chpt. 13 appendix chpt. 13. Explaining Depositor & Bank Behavior; chpt.14. (Optional) Section III. The Federal Reserve and Monetary Policy Movements of the Monetary Base; chpt. 16 Tools of Monetary Policy; chpt. 17 Monetary Targets; chpt. 18 Section IV. Monetary Theory Money Demand; chpt. 19 The Keynesian Framework: ISLM; chpt . 20, 21 Aggregate Demand and Aggregate Supply; chpt 22 Money & Inflation; chpt. 24