M&B /
Dean Croushore
- Sudent edition
- South-Western Cengage Learning c2010
- x, 432 p. : ill. ; 28 cm
Contents
Chapter 1: Introduction to Money and Banking What’s in This Text? The Value of Money ad Banking for Everyday Life Why is Government Policy So Crucial for Money and Banking? Ten (Surprising) Facts Concerning Money and Banking 1. Most financial formulas—no matter how complicated they look—are based on the compounding of interest 2. More U.S. currency is held in foreign countries than in the United States 3. Interest rates on long-term loans generally are higher than interest rates on short-term loans 4. To understand how interest rates affect economic decisions, you must account for expected inflation 5. Buying stock is the best way to increase your wealth—and the worst 6. Banks and other financial institutions made major errors that led to the financial crisis of 2008. 7. Recessions are difficult to predict. 8. The Fed creates money by changing a number in its computer system. 9. In the long run, the only economic variable the Federal Reserve can affect is the rate of inflation—the Fed has no effect on economic activity. 10. You can predict how the Federal Reserve will change interest rates using a simple equation.
PART ONE: MONEY AND THE FINANCIAL SYSTEM
Chapter 2: The Financial System and the Economy Financial Securities Debt and Equity Differences Between Debt and Equity Matching Borrowers with Lenders Direct Versus Indirect Finance Financial Intermediaries Functions of Financial Intermediaries Financial Markets The Structure of Financial Markets How Financial Markets Determine Prices of Securities Calculating the Price of a Security The Financial System The Financial System and Economic Growth What Happens When the Financial System Works Poorly? Application to Everyday Life: What Do Investors Care About? Five Determinants of Investors’ Decisions How to Calculate a Security’s Expected Return How to Calculate the Standard Deviation of the Return to a Security Data Bank: Default Risk on Debt Data Bank: How Much Risk Do Investors Face from Inflation? Choosing a Financial Investment Portfolio
Chapter 3: Money and Payments How We Use Money Medium of Exchange Gresham’s Law and Money in P.O.W. Camps Unit of Account Store of Value Standard of Deferred Payment The Payments System Outside Money Inside Money Counting Money Measuring the Money Supply The Federal Reserve’s Monetary Aggregates The Case of the Missing Currency Alternative Measures of Money Application to Everyday Life: What Do You Do with Your Change?
Chapter 4: Present Value The Present Value of One Future Payment Investing, Borrowing, and Compounding Discounting The General Form of the Present-Value Formula Timelines to Describe Payment Amounts The Present Value of a Perpetuity The Present Value of a Fixed-Payment Security The Present Value of a Coupon Bond The Present Value When Payments Occur More Often Than Once Each Year Using Present Value to Make Decisions Comparing Alternative Offers Buying or Leasing a Car Interest-Rate Risk The Relationship Between the Market Interest Rate and the Price Using the Present-Value Formula to Calculate Payments Looking Forward or Looking Backward at Returns One Payment in One Year One Payment More Than One Year in the Future Perpetuity Fixed-Payment Security Coupon Bond Payments Made More Frequently Than Once Each Year Data Bank: Do Our Calculations Match What Is Reported in the Financial Press? Policy Insider: Annual Percentage Yield Application to Everyday Life: How to Negotiate a Car Lease
Chapter 5: The Structure of Interest Rates What Explains Differences in Interest Rates? The Many Different Types of Debt Securities Demand and Supply in the Secondary Market Affect Interest Rates Supply in the Primary Market Affects Interest Rates The Term Structure of Interest Rates Data on the Term Structure of Interest Rates How Investors Choose Between Short- and Long-Term Securities The Notation Used in Describing Interest Rates What Determines the Term Structure of Interest Rates in Equilibrium? Data Bank: How Accurate Are Expectations of Short-Term Interest Rates? Equilibrium Interest Rates Under the Expectations Theory of the Term Structure The Term Premium The Increased Interest-Rate Risk of Long-Term Debt Securities How Do We Incorporate a Term Premium in Our Analysis? Data Bank: The Term Premium When Short-Term Interest Rates Are Expected to Change The Yield Curve and the Business Cycle Policy Perspective: Can the Term Spread Help Predict Recessions?
Chapter 6: Real Interest Rates What Are Real Interest Rates? Why Inflation Risk Is a Problem for Investors How Inflation-Indexed Securities Work How Adjustable-Rate Mortgages Work Real Present Value What Affects Real Interest Rates? Measuring Real Interest Rates How Do Expected Real Interest Rates React to Changes in the Expected Inflation Rate? What Happens to Expected Real Interest Rates in a Recession? Application to Everyday Life: How Inflation and Taxes Reduce Investors’ Returns
Chapter 7: Stocks and Other Assets The Stock Market Issuing and Investing in Stock An Investor’s View of Stock Returns and Prices Historical Returns and Stock Prices Data Bank: The Explosion of Tech Stocks in the Late 1990’s and Their Implosion in the Early 2000s How Can an Investor Profit in the Stock Market? The Efficient Markets Hypothesis and Stock-Price Movements Are Stock Prices Unpredictable? Are Stock Returns Predictable Only Because of Risk? A Random Walk with a Crutch What Determines Average Stock Prices and Returns? Application to Everyday Life: Comparing Stocks with Bonds and Other Financial Investments Comparing Stocks with Debt Securities: The Equity Premium Is the Equity Premium So High Because the United States is Lucky? Other Assets as Investments How Investors Can Diversify Their Portfolios
PART TWO: FUNDAMENTALS OF BANKING
Chapter 8: How Banks Work The Role of Banks Asymmetric-Information Problems Failures of the Banking System How Do Banks Earn Profits? A Bank’s Balance Sheet Reserve Accounting Bank Profits Those Pesky ATM Fees Why Are Interest Rates on Credit Cards So High? The Risks Banks Take Policy Insider: Interest on Reserves
Chapter 9: Government’s Role in Banking Regulation of Banks Why Does the Government Regulate Banks? Policy Insider: How Today’s Banking System Reflects Yesterday’s Regulations How Does Government Regulation Achieve Its Goals? Policy Insider: A History of Major Banking Regulations Do Banks Receive a Net Subsidy from the Government? Supervision of Banks Bank Supervisors Deposit Insurance Rating Banks Policy Insider: Should Mergers of Big Banks Be Allowed? Evaluating Bank Mergers The Merger of First Union and CoreStates The Impact of Mergers on Bank Profits
PART THREE: MACROECONOMICS
Chapter 10: Economic Growth and Business Cycles Measuring Economic Growth A View of Economic Growth Based on Labor Data Data Bank: Why is the Economy More Stable in the Long Boom? A View of Economic Growth Using Data on Both Labor and Capital Business Cycles What Is a Business Cycle? The Causes of Business Cycles Data Bank: The Anxious Index Application to Everyday Life: How Does Economic Growth Affect Your Future Income?
Chapter 11: Modeling Money The ATM Model of the Demand for Cash The Liquidity-Preference Model The Dynamic Model of Money The Effects of an Increase in Money Supply The Effects of an Increase in the Growth Rate of the Money Supply Policy Perspective: Using Models of Money Demand in Practice Microeconomic Foundations of Money and the Friedman Rule Policy Insider: Can the Federal Reserve Accurately Forecast in the Demand for Money?
Chapter 12: The Aggregate-Demand/Aggregate-Supply Model A Model of Aggregate Demand and Aggregate Supply Aggregate Demand Data Bank: Is Consumer Confidence a Good Indicator of Future Consumer Spending? Aggregate Supply Putting Aggregate Demand and Aggregate Supply Together From the Short Run to the Long Run How Shifts in Exogenous Variables Affect Aggregate Demand and Aggregate Supply An Example: A Drop in Business Optimism Adjustment from the Short Run to the Long Run Data Bank: Investment Shocks and the Business Cycle Analyzing Policy Using the AD-AS Model Monetary Policy Effects of Fiscal Policy Large, Structural Macroeconomic Models Policy Perspective: Did Large Macro Models Mislead Policymakers in the 1970s?
Chapter 13: Modern Macroeconomic Models Dynamic Models A Two-Period Model of Consumption and Saving General Equilibrium Expectations The Impact of Changes in Government Policy Policy Insider: Tax Cuts and Consumer Spending Dynamic, Stochastic, General-Equilibrium Models Real Business-Cycle Models Modern DSGE Models Statistical Models of the Economy Policy Insider: Do Modern Macroeconomic Models Have Any Value for Policy? The New Neoclassical Synthesis
Chapter 14: Economic Interdependence The International Business Cycle Why Is There an International Business Cycle? How Correlated Are the Business Cycles in Different Economies? International Transmission of Shocks Exchange Rates Exchange Rates Matter for Prices of Goods How Supply and Demand Determine Exchange Rates How International Trade Affects the Exchange Rate How Financial Investment Affects the Exchange Rate How Exchange Rates Affect the Economy How Savings Are Used Data Bank: Productivity and Appreciation The New Open-Economy Macroeconomics Policy Perspective: How Independent Should a Country Be?
PART FOUR: MONETARY POLICY
Chapter 15: The Federal Reserve System Federal Reserve Banks Policy Insider: Why Power is Diffuse at the Fed The Structure of a Federal Reserve Bank Central Bank Functions Performed by Federal Reserve Banks The Board of Governors Policy Inside: William McChesney Martin and the Independence of the Fed The Federal Open Market Committee Open-Market Operations The FOMC Directive The FOMC Meeting The “Books” of the FOMC