An Overview of the Financial System
Financial markets and financial intermediaries have the basic function of moving funds
from those who have a surplus to those who has a shortage. (Good reference chapter)
This chapter just gives a general overview of fi
Understanding Interest Rates
Interest rates play a huge role in the economy and our everyday lives. They affect whether or not
firms and businesses save or spend, where we store our funds exactly, etc. This chapter is the
first step in 4, 5, and 6, which
Tools of Monetary Policy
In chapter 12, the history, structure, etc ., of the Fed was explained. Chapters 13 and 14 showed
how the Fed controls the MB and the money multipliers (M1 and M2). The other players also
affected the multiplier.
Chapters 13 and 1
The Stock Market, the Theory of Rational Expectations, and the Efficient Markets
The stock market is not really discussed in great detail in this course, but it cannot be totally
avoided. The stock market affects, and is affected by, all the to
The Risk and Term Structure Interest Rates
Chapter 4 discussed what interest rates are, their relationships, and what changes meant. Chapter
5 explained what caused changes in the interest rate and how it changed with altering market
forces such as expect
The Behavior Interest Rates
In chapter 4, we talked about what interest rates were, how they were measured (through
definitions on different credit instruments and how they were measured in real terms), and the
consequences changes in interest rates broug
Term Structure of Interest Rates
Yield curve shows yields for bonds with the same risk structure but different terms to
There are three facts about yield curves we will try to explain.
1. Bonds with different maturities have interest rates that m
Multiple Deposit Creation and the Money Supply Process
Chapter 12 discussed the Federal Reserves history, structure, responsibilities, etc. Now we start
to analyze what the Fed does and how, specifically, exercising control of the money supply.
Financial Market Instruments
Now that weve talked about the basic functions and structures of financial markets, we
talk about the securities that are traded in the financial markets by all participants.
a. Money Market Instruments shot term debt instrume
Determinants of the Money Supply
Chapter 13 introduced concepts on how the Fed controls the MB and how changes in the MB
affect the amount of checkable deposits in the banking system through the simple model of
multiple deposit creation.
D = * R
What Is Money?
A great deal of what will be talked about in this course involves money. We look at moneys
influence on interest rates, different markets, the economy as a whole, how the Federal Reserve
is involved, etc.
Since money is so important in this