Money, Banking, and the Financial System

Description

For courses in Economics.

Help students master the modern landscape of money, banking, and the financial system

Money, Banking, and The Financial System, 3rd Edition, gets students excited about the extremely important topics of money, banking, and financial markets. In the past 10 years, virtually every aspect of how money is borrowed and lent, how banks and financial firms operate, and how policymakers regulate the financial system has changed. This text arms students with the the most up-to-date coverage of events to grasp these changes and navigate the current monetary and financial system.

For courses in Economics.

Help readers master the modern landscape of money, banking, and the financial system

Money, Banking, and The Financial System, 3rd Edition, gets readers excited about the extremely important topics of money, banking, and financial markets. In the past 10 years, virtually every aspect of how money is borrowed and lent, how banks and financial firms operate, and how policymakers regulate the financial system has changed. This text arms readers with the the most up-to-date coverage of events to grasp these changes and navigate the current monetary and financial system.

MyLab™ Economics is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts.

Note: You are purchasing a standalone product; MyLab Economics does not come packaged with this content. Students, if interested in purchasing this title with MyLab Economics, ask your instructor for the correct package ISBN and Course ID. Instructors, contact your Pearson representative for more information.

If you would like to purchase both the physical text and MyLab Economics, search for:

0134640284 / 9780134640280 Money, Banking, and the Financial System Plus MyLab Economics with Pearson eText — Access Card Package, 3/e

Package consists of:

• 0134524063 / 9780134524061 Money, Banking, and the Financial System
• 0134525868 / 9780134525860 MyLab Economics with Pearson eText — Access Card — for Money, Banking, and the Financial

Glenn Hubbard, Professor, Researcher, and Policymaker

R. Glenn Hubbard is the dean and Russell L. Carson Professor of Finance and Economics in the Graduate School of Business at Columbia University and professor of economics in Columbia’s Faculty of Arts and Sciences. He is also a research associate of the National Bureau of Economic Research and a director of Automatic Data Processing, Black Rock Closed-End Funds, and MetLife. He received his PhD in economics from Harvard University in 1983. From 2001 to 2003, he served as chairman of the White House Council of Economic Advisers and chairman of the OECD Economy Policy Committee, and from 1991 to 1993, he was deputy assistant secretary of the US Treasury Department. He currently serves as co-chair of the nonpartisan Committee on Capital Markets Regulation. Hubbard’s fields of specialization are public economics, financial markets and institutions, corporate finance, macroeconomics, industrial organization, and public policy. He is the author of more than 100 articles in leading journals, including American Economic Review, Brookings Papers on Economic Activity, Journal of Finance, Journal of Financial Economics, Journal of Money, Credit, and Banking, Journal of Political Economy, Journal of Public Economics, Quarterly Journal of Economics, RAND Journal of Economics, and Review of Economics and Statistics. His research has been supported by grants from the National Science Foundation, the National Bureau of Economic Research, and numerous private foundations.

Tony O’Brien, Award-Winning Professor and Researcher

Anthony Patrick O’Brien is a professor of economics at Lehigh University. He received his PhD from the University of California, Berkeley, in 1987. He has taught money, banking, and financial markets courses for more than 250 years. He received the Lehigh University Award for Distinguished Teaching. He was formerly the director of the Diamond Center for Economic Education and was named a Dana Foundation Faculty Fellow and Lehigh Class of 1961 Professor of Economics. He has been a visiting professor at the University of California, Santa Barbara, and at Carnegie Mellon University. O’Brien’s research has dealt with such issues as the evolution of the US automobile industry, the sources of US economic competitiveness, the development of US trade policy, the causes of the Great Depression, and the causes of black—white income differences. His research has been published in leading journals, including American Economic Review, Quarterly Journal of Economics, Journal of Money, Credit, and Banking, Industrial Relations, Journal of Economic History, and the Journal of Policy History. His research has been supported by grants from government agencies and private foundations.

About the book

A modern, brief approach pays close attention to recent developments in policy and theory

• This brief, up-to-date approach helps students better grasp the most relevant concepts and theories.
• The text stresses a lesson policymakers learned the hard way: What happens in the shadow banking system is as important to the economy as what happens in the commercial banking system.
• Presents students with the underlying economic explanations of why the financial system is organized as it is and how the financial system is connected to the broader economy.
• Offers a framework that allows students to apply the theory that they learn in the classroom to the practice of the real world. This framework includes understanding, evaluating, and predicting; a modern approach; integration of international topics; and a focus on the Federal Reserve.

Coverage of the most important and recent topics

• NEW! Coverage of how interest rates are determined using the money market model helps professors cover the relationship between money supply growth and interest rates (Section 4.4).
• EXPANDED! Discussion of stocks and market indexes has been included (Section 6.1).
• REVISED! The use of derivatives in foreign exchange markets has been moved to the end of Chapter 8 where it can be easily omitted by instructors who do not wish to cover it. The remainder of the material has been integrated into the first section. The relationship between the demand and supply approach to analyzing exchange rates and the interest-rate parity approach in the final section has been rewritten and clarified.
• NEW! Coverage of why economists believe economic performance depends on the financial system, an extremely important topic in the aftermath of the 2007-2009 financial crisis, has been added (Section 9.1).
• NEW! Discussion of how the possible effect of The Wall Street Reform and Consumer Protection Act (Dodd-Frank) has narrowed the Federal Reserve’s ability to act as a lender of self-resort in the event of another financial crisis has been added (Section 12.4).  
• NEW! Coverage of how the huge increase in bank reserves has affected the determination of federal funds rate traditional assumption of scarce reserves has been included (Section 15.2).
• NEW! Information on how the Fed currently manages the federal funds rate now that reserves are no longer scarce has been included (Section 15.3).
• REVISED! Coverage of China’s interventions in the exchange rate market that emphasizes the risk facing China’s economy and financial system has been added (Section 16.4).
• NEW! Coverage of the shadow bank lending channel, and the role of shadow banking in the 2007-2009 financial crisis and current financial system has been added (Section 18.4).
• REVISED! and UPDATED! Chapter 11 opening cases have been replaced and retained cases have been revised.
• NEW! 18 Making the Connections features have been added throughout the text, including several that apply to students’ lives and decisions.
• NEW! and UPDATED! Solved Problems help students overcome difficulties in solving applied economics problems by providing worked-out answers.
• NEW! and UPDATED! 23 Figures and 4 Tables have been added, and remaining graphs and tables have been updated with the latest available data.
• NEW! and UPDATED! Half of the Review Questions and Problems and Applications have been replaced or revised.
• Data Exercises help students become familiar with a key data source, learn how to locate data, and develop skills to interpret the latest data.

Also available with MyLab Economics

MyLab™ Economics is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts

• The Enhanced eText keeps students engaged in learning on their own time, while helping them achieve greater conceptual understanding of course material. The worked examples and eText links bring learning to life, and algorithmic practice allows students to apply the very concepts they are reading about. Combining resources that illuminate content with accessible self-assessment, MyLab Economics with Enhanced eText provides students with a complete digital learning experience–all in one place.
• NEW! Math Review Exercises. MyLab Economics now offers a rich array of assignable and auto-graded exercises covering fundamental math concepts geared specifically to principles and intermediate economics students. Aimed at increasing student confidence and success, our new math skills review Chapter R is accessible from the assignment manager and contains over 150 graphing, algebra, and calculus exercises for homework, quiz, and test use. Offering economics students warm-up math assignments, math remediation, or math exercises as part of any content assignment has never been easier!
• Concept Checks at the end of each section act as “speed bumps” that encourage students to stop and check their understanding of fundamental terms and concepts before moving on to the next section. Consisting of a few multiple-choice, true/false, or fill-in-the-blank questions, they help students assess their progress on a section-by-section basis, so they can better prepare for homework, quizzes, and exams.
• UPDATED! Animated Graphs. Animated graphs in MyLab Economics accompany many of the key graphs and figures in the text, and are updated on demand with real-time data from FRED™ (Federal Reserve Economic Data)–a comprehensive, up-to-date data set maintained by the Federal Reserve Bank of St. Louis. Students can display a pop-up graph that shows new data plotted in the graph, to better understand how to work with data and understand how including new data affects graphs.
• Question Help. MyLab Economics homework and practice questions are correlated to the textbook, and many generate algorithmically to give students unlimited opportunity for practice and mastery, and they offer helpful feedback when students enter incorrect answers. Questions include eText links and some contain guided solutions and other multimedia assets for extra help at point-of-use.
• All end-of-chapter Questions and Problems, including algorithmic, graphing, and numerical questions and problems, are available for student practice and instructor assignment. Test Item File multiple-choice questions are available for assignment as homework. Student scores are tracked in a gradebook for instructors.
• NEW! Current News Exercises. Every week, current microeconomic and macroeconomic news stories, with accompanying exercises, are posted to MyLab Economics. Assignable and auto-graded, these multi-part exercises ask students to recognize and apply economic concepts to real-world events.
• Learning Aids. The MyLab Economics homework and practice questions are correlated to the textbook, and many regenerate algorithmically to give students unlimited opportunity for practice and mastery, and offer helpful feedback when students enter incorrect answers. Learning aids, such as Help Me Solve This, provide extra help for students at the point-of-use.
• 46 Real-time Data Analysis Exercises. Easy to assign and automatically graded, Real-Time Data Analysis exercises use up-to-the-minute, real-time macroeconomic data. These exercises communicate directly with the Federal Reserve Bank of St. Louis’s FRED site, so every time FRED posts new data, students see new data. As a result, Real-Time Data Analysis exercises offer a no-fuss solution for instructors who want to make the most recent data a central part of their macro course. Real-Time Data Analysis exercises are available in the latest Principles of Economics (all versions), Intermediate Macroeconomics, and Money & Banking courses. Just look for the Real-Time Data Analysis icon!
• Personalized Learning. Not every student learns the same way or at the same rate. With the growing need for acceleration through many courses, it’s more important than ever to meet students where they learn. Personalized learning in MyLab Economics gives you the flexibility to incorporate the approach that best suits your course and your students.
• The Study Plan acts as a tutor, providing personalized recommendations for each of your students based on his or her ability to master the learning objectives in your course. This allows students to focus their study time by pinpointing the precise areas they need to review, and allowing them to use customized practice and learning aids to get them back on track. Using the report available in the Gradebook, you can then tailor course lectures to prioritize the content where students need the most support–offering you better insight into classroom and individual performance.
• Reporting Dashboard. View, analyze, and report learning outcomes clearly and easily, and get the information you need to keep your students on track throughout the course, with the new Reporting Dashboard. Available via the MyLab Economics Gradebook and fully mobile-ready, the Reporting Dashboard presents student performance data at the class, section, and program levels in an accessible, visual manner.
• Learning Management System (LMS) Integration. You can now link from Blackboard Learn, Brightspace by D2L, Canvas, or Moodle to MyLab Economics. Access assignments, rosters, and resources, and synchronize grades with your LMS Gradebook. For students, single sign-on provides access to all the personalized learning resources that make studying more efficient and effective.
• Learning Catalytics™ helps you generate class discussion, customize your lecture, and promote peer-to-peer learning with real-time analytics. As a student response tool, Learning Catalytics uses students’ smartphones, tablets, or laptops to engage them in more interactive tasks and thinking.
• NEW! Upload a full PowerPoint^® deck for easy creation of slide questions.
• NEW! Team names are no longer case sensitive.
• Help your students develop critical thinking skills.
• Monitor responses to find out where your students are struggling.
• Rely on real-time data to adjust your teaching strategy.
• Automatically group students for discussion, teamwork, and peer-to-peer learning.

• Part 1: Foundations
• 1. Introducing Money and the Financial System
• 2. Money and the Payments System
• 3. Interest Rates and Rates of Return
• 4. Determining Interest Rates
• Part 2: Financial Markets
• 5.  The Risk Structure and Term Structure of Interest Rates
• 6. The Stock Market, Information, and Financial Market Efficiency
• 7. Derivatives and Derivative Markets
• 8. The Market for Foreign Exchange
• Part 3: Financial Institutions
• 9. Transactions Costs, Asymmetric Information, and the Structure of the Financial System
• 10. The Economics of Banking
• 11. Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions
• 12. Financial Crises and Financial Regulation
• Part 4: Monetary Policy
• 13. The Federal Reserve and Central Banking
• 14. The Federal Reserve’s Balance Sheet and the Money Supply Process
• 15. Monetary Policy
• 16. The International Financial System and Monetary Policy
• Part 5: The Financial System and the Macroeconomy
• 17. Monetary Theory I: The Aggregate Demand and Aggregate Supply Model
• 18. Monetary Theory II: The IS—MP Model

About the book

Coverage of the most important and recent topics

• Coverage of how interest rates are determined using the money market model helps professors cover the relationship between money supply growth and interest rates (Section 4.4).
• Discussion of stocks and market indexes has been included (Section 6.1).
• The use of derivatives in foreign exchange markets has been moved to the end of Chapter 8 where it can be easily omitted by instructors who do not wish to cover it. The remainder of the material has been integrated into the first section. The relationship between the demand and supply approach to analyzing exchange rates and the interest-rate parity approach in the final section has been rewritten and clarified.
• Coverage of why economists believe economic performance depends on the financial system, an extremely important topic in the aftermath of the 2007-2009 financial crisis, has been added (Section 9.1).
• Discussion of how the possible effect of The Wall Street Reform and Consumer Protection Act (Dodd-Frank) has narrowed the Federal Reserve’s ability to act as a lender of self-resort in the event of another financial crisis has been added (Section 12.4).  
• Coverage of how the huge increase in bank reserves has affected the determination of federal funds rate traditional assumption of scarce reserves has been included (Section 15.2).
• Information on how the Fed currently manages the federal funds rate now that reserves are no longer scarce has been included (Section 15.3).
• Coverage of China’s interventions in the exchange rate market that emphasizes the risk facing China’s economy and financial system has been added (Section 16.4).
• Coverage of the shadow bank lending channel, and the role of shadow banking in the 2007-2009 financial crisis and current financial system has been added (Section 18.4).
• Chapter 11 opening cases have been replaced and retained cases have been revised.
• 18 Making the Connections features have been added throughout the text, including several that apply to students’ lives and decisions.
• Solved Problems help students overcome difficulties in solving applied economics problems by providing worked-out answers.
• 23 Figures and 4 Tables have been added, and remaining graphs and tables have been updated with the latest available data.
• Half of the Review Questions and Problems and Applications have been replaced or revised.

Also available with MyLab Economics

MyLab™ Economics is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts

• Math Review Exercises. MyLab Economics now offers a rich array of assignable and auto-graded exercises covering fundamental math concepts geared specifically to principles and intermediate economics students. Aimed at increasing student confidence and success, our new math skills review Chapter R is accessible from the assignment manager and contains over 150 graphing, algebra, and calculus exercises for homework, quiz, and test use. Offering economics students warm-up math assignments, math remediation, or math exercises as part of any content assignment has never been easier!
• Animated Graphs. Animated graphs in MyLab Economics accompany many of the key graphs and figures in the text, and are updated on demand with real-time data from FRED™ (Federal Reserve Economic Data)–a comprehensive, up-to-date data set maintained by the Federal Reserve Bank of St. Louis. Students can display a pop-up graph that shows new data plotted in the graph, to better understand how to work with data and understand how including new data affects graphs.
• Current News Exercises. Every week, current microeconomic and macroeconomic news stories, with accompanying exercises, are posted to MyLab Economics. Assignable and auto-graded, these multi-part exercises ask students to recognize and apply economic concepts to real-world events.