Test Bank
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, This work is protected by United States copyright laws and is provided solely for the use of instructors in teachi
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Project Manager: Kerri McQueen
Production Editor: Alison Esuden
Manufacturing Buyer: Carol Melville
Copyright© 2010, 2007, 2004, 2001 Pearson Education, Inc., 75 Arlington Street, Boston, MA 02116. Pearson Addison
All rights reserved. Printed in the United States of America. This publication is protected by copyright and permissio
be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmissio
form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding perm
write to: Rights and Permissions Department.
This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching thei
and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) wi
the integrity of the work and is not permitted. The work and materials from it should never be made available to
except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide
restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these m
Pearson Addison-Wesley™ is a trademark of Pearson Education, Inc.
123456OPM12111009
ISBN-13: 978-0-321- 59981-0 ISBN-10: 0-321-59981-0
,
, Contents
Chapter 1 Why Study Money, Banking, and Financial Markets? ................................................................................... 1
Chapter 2 An Overview of the Financial System ......................................................................................................... 22
Chapter 3 What Is Money? ............................................................................................................................................ 45
Chapter 4 Understanding Interest Rates ...................................................................................................................... 65
Chapter 5 The Behavior of Interest Rates ..................................................................................................................... 82
Chapter 6 The Risk and Term Structure of Interest Rates ......................................................................................... 115
Chapter 7 The Stock Market, the Theory of Rational Expectations, .......................................................................137
and the Efficient Market Hypothesis ...........................................................................................................................137
Chapter 8 An Economic Analysis of Financial Structure ............................................................................................155
Chapter 9 Financial Crises and the Subprime Meltdown ..........................................................................................173
Chapter 10 Banking and the Management of Financial Institutions .........................................................................185
Chapter 11 Economic Analysis of Financial Regulation .............................................................................................. 211
Chapter 12 Banking Industry: Structure and Competition .........................................................................................231
Chapter 13 Central Banks and the Federal Reserve System ..................................................................................... 255
Chapter 14 The Money Supply Process ...................................................................................................................... 276
Chapter 15 Tools for Monetary Policy......................................................................................................................... 320
Chapter 16 The Conduct of Monetary Policy: Strategy and Tactics ........................................................................ 343
Chapter 17 The Foreign Exchange Market ................................................................................................................. 363
Chapter 18 The International Financial System .......................................................................................................... 390
Chapter 19 The Demand for Money ........................................................................................................................... 421
Chapter 20 The ISLM Model ........................................................................................................................................442
Chapter 21 Monetary and Fiscal Policy in the ISLM Model ...................................................................................... 467
to accompany
Page 2
, This work is protected by United States copyright laws and is provided solely for the use of instructors in teachi
courses and assessing student
learning. Dissemination or sale of any part of this work (including on the
Worldwide (Web) will destroy the integrity of the work and is not permitted. The work and materials from it shou
be made available to
students except by instructors using the accompanying text in their classes. All recipients of this work are exp
abide by these
restrictions and to honour the intended pedagogical purposes and the needs of other instructors who rely o
materials.
Acquisitions Editor: Noel Kam Seibert
Project Manager: Kerri McQueen
Production Editor: Alison Esuden
Manufacturing Buyer: Carol Melville
Copyright© 2010, 2007, 2004, 2001 Pearson Education, Inc., 75 Arlington Street, Boston, MA 02116. Pearson Addison
All rights reserved. Printed in the United States of America. This publication is protected by copyright and permissio
be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmissio
form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding perm
write to: Rights and Permissions Department.
This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching thei
and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) wi
the integrity of the work and is not permitted. The work and materials from it should never be made available to
except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide
restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these m
Pearson Addison-Wesley™ is a trademark of Pearson Education, Inc.
123456OPM12111009
ISBN-13: 978-0-321- 59981-0 ISBN-10: 0-321-59981-0
,
, Contents
Chapter 1 Why Study Money, Banking, and Financial Markets? ................................................................................... 1
Chapter 2 An Overview of the Financial System ......................................................................................................... 22
Chapter 3 What Is Money? ............................................................................................................................................ 45
Chapter 4 Understanding Interest Rates ...................................................................................................................... 65
Chapter 5 The Behavior of Interest Rates ..................................................................................................................... 82
Chapter 6 The Risk and Term Structure of Interest Rates ......................................................................................... 115
Chapter 7 The Stock Market, the Theory of Rational Expectations, .......................................................................137
and the Efficient Market Hypothesis ...........................................................................................................................137
Chapter 8 An Economic Analysis of Financial Structure ............................................................................................155
Chapter 9 Financial Crises and the Subprime Meltdown ..........................................................................................173
Chapter 10 Banking and the Management of Financial Institutions .........................................................................185
Chapter 11 Economic Analysis of Financial Regulation .............................................................................................. 211
Chapter 12 Banking Industry: Structure and Competition .........................................................................................231
Chapter 13 Central Banks and the Federal Reserve System ..................................................................................... 255
Chapter 14 The Money Supply Process ...................................................................................................................... 276
Chapter 15 Tools for Monetary Policy......................................................................................................................... 320
Chapter 16 The Conduct of Monetary Policy: Strategy and Tactics ........................................................................ 343
Chapter 17 The Foreign Exchange Market ................................................................................................................. 363
Chapter 18 The International Financial System .......................................................................................................... 390
Chapter 19 The Demand for Money ........................................................................................................................... 421
Chapter 20 The ISLM Model ........................................................................................................................................442
Chapter 21 Monetary and Fiscal Policy in the ISLM Model ...................................................................................... 467
