Macro Review: Short-Run A period of time during which at least one input is fixed. Long-Run A period of time during which all inputs are variable. Unemployment Rate = (# of unemployed)/(# in labor force) Labor Force Over age 16, not in military, employed,
Chapter 7 - FOREIGN EXCHANGE MARKET
In mid-80s, lots of Americans traveled to Europe. Why? The US dollar was at
an all-time high in 1985. When the dollar is strong, foreign travel is
cheap. Strong dollar makes all foreign goods and services seem cheap to
CHAPTER 15 - MULTIPLE DEPOSIT CREATION AND THE MS
MS PROCESS - the mechanism that determines the money supply, the
implementation of monetary policy. It is important to understand the MS
Process to understand exactly how open market operations (OM
Chapter 8 - ECONOMIC ANALYSIS OF FINANCIAL STRUCTURE
PART III OF TEXT: FINANCIAL INSTITUTIONS
We studied financial markets in Part II, and we now turn to financial
institutions (banks). Remember some of the important functions of financial
Chapter 9 - The Banking Firm and Bank Management
We saw in CH 8, that commercial banks and bank loans play an extremely
important role in the economy, supplying over $5T of credit annually. By
efficiently channeling funds from savers to borrowers, the eco
CHAPTER 2 - OVERVIEW OF THE FINANCIAL SYSTEM
Financial markets (bond and stock) and financial intermediaries (banks, ins
cos., pension funds) perform the econ function of channeling/directing funds
from people who have a surplus of funds ( Y > C) to those
MISHKIN - CHAPTER 3 - WHAT IS MONEY?
What is Money?
From an economic viewpoint, money is anything that is generally accepted as
final payment for goods and services or for the repayment of debt cash/currency, checks, gold, tobacco, salt, etc.
To start our
DURATION LECTURE (INTEREST RATE RISK)
Interest Rate Risk: The risk that investors, fund managers, companies, banks,
borrowers, lenders, etc. are exposed to. Risk of an adverse interest rate
There are two types of Interest Rate Risk:
1. CAPITAL O
CHAPTER 4 - UNDERSTANDING INTEREST RATES
Interest rates are among the most closely watched economic variables.
Reported daily in the news. Why? Interest have a very powerful effect on the
economy. Interest rates affect stock market, borrowing decisions by
CHAPTER 16 - DETERMINANTS OF THE MONEY SUPPLY (M)
In Ch 15, we developed a simple model of multiple deposit creation (and the
SDM), where the FRS can influence the amount of checking deposits (D) and
the Money Supply (M = C + D) by changing the reserve re
Chapter 6 - Risk and Term Structure of Interest Rates
In CH 5 we assumed just one interest rate in the economy, the interest rate on
bonds. We now look at why interest rate will vary, either due to differences
in risk or differences in maturity.
CHAPTER 5 - THE BEHAVIOR OF INTEREST RATES
Nominal interest rates for 3 month Tbills were 1% in the early 50s, reached
15% in 1981, fell to 3% in 1993 and rose to 5% in 1995, and are now about 6%
(See page 88). What explains these interest rate movements?