Course Objectives
In recent years, the study of money, banking and financial systems has changed rapidly as new financial instruments are created almost daily. Like other aspects of the economy, the U.S. banking industry is now very dynamic and well integrated into international financial markets and world trade. Therefore, to understand these new and ever changing relationships, this course will explore how money functions in a modern economy and how the central bank controls the supply of money and the resulting impact on inflation, employment, output, interest rates, exchange rates and foreign trade. Finally, and most important, you will be required to apply the "economic way of thinking" to analyze monetary and financial news.
Prerequisites
EC 203 or equivalent and working knowledge of basic mathematics (including simple algebra). Consequently, the level of work assigned and exams will be geared to those students who have a working knowledge of EC 203. Therefore, if you don't remember basic principles from EC 203, you will be responsible for "catching up" by reviewing a principles of macroeconomics textbook.
Instructional Method
The course will be taught through lecture and class discussion. I strongly encourage student participation and questions. Remember, there are no dumb questions! In-class assignments, often times in groups, will be required.
Learning Contract. You will be expected to attain a specific level of knowledge before each exam. My expectations for you will be clearly defined and I will do all I can to help you to achieve that level of knowledge. To help ensure that you obtain the required knowledge, you should read the material before coming to class, work all end-of-chapter questions, don't memorize information but learn to think critically, ask questions in class and come to see me during my office hours to discuss questions and concerns.
This is a course for which you need to spend time daily. Please don't try to "cram" 2 days before an exam. It usually won't work because I require you to think, analyze and apply not memorize and regurgitate. To be able to think, analyze and apply, you need time to "mull over" the concepts and ideas. This usually can't be done during "cram" sessions.
Evaluation and Grading Policy
Your final grade will be based on four exams each worth 25% of your final grade. The exam questions will be multiple choice and short answer/essay questions, and application problems.
No baseball caps will be worn during the exams. No make-up exams will be allowed unless it is an extreme emergency and I am notified prior to exam time. If a make-up is allowed, it will consist of all essay questions and will be given during the last week of the quarter.
A = 90-100%
B = 80-89%
C = 70-79%
D = 60-69%
F = <60%
<60 %
Note:Grades will not be posted. Exams will be returned and discussed. If you want to receive your final grade as soon as possible after the final is taken, please bring me a stamped, self-addressed envelope or postcard during the last week of the class or when you come to take the final exam.
Classroom Etiquette:
Please come to class on time. Let me know before class begins if you need to leave early. Students who consistently arrive late or leave early will lose 5 percentage points from his/her final grade. Remember, arriving late or leaving early is not only rude but also very disruptive to the learning process.
Assignments
These assignments are not carved in stone. We may move faster or slower than the schedule indicates. You are responsible for being aware of all changes.
Topic/Chapter
Introduction
1 + Appendix
Overview of Money, Banking Industry and Financial System
2 (pp. 20-42), 3, and 9(pp. 199-207)
Fundamentals of Interest Rates
4, 6 (pp. 104-128), and 7(pp. 143-153)
EXAM #1
Foreign Exchange
8 (pp. 163-176; 177-191)
Overview of Banking System
10 (pp. 226-240; 244-250; 255-261)
Financial Institutions
11, 12
The Fed
15 (review)
EXAM #2
Money Supply Process
16 & 17
Monetary Policy Tools
18 (review)
Monetary Policy--Target & Goals
19 (pp. 474-483; 493-500)
International Financial System
20 (pp. 507-513; 517-523)
EXAM #3
Demand for Money
21
Aggregate Supply and Aggregate Demand Analysis
24 (review)
Money and Economic Activity
25
Money and Inflation
26
Rational Expectations & Policy
27 (pp. 686-692)
EXAM #4