9th Edition
KathyKelly i. RichardG.Stahl i. i.
University of Texas, Arlington
i. i. i. Louisiana StateUniversity i. i.
Pearson Addison-Wesley i .
Boston SanFrancisco NewYork i . i. i . i.
London Toronto Sydney Tokyo Singapore Madrid Me
i . i . i . i . i . i.
xicoCity Munich Paris CapeTown HongKong Montreal
i. i . i . i . i. i . i. i .
,Contents
i.
Chapter 1
i. Why Study Money, Banking, and Financial Markets? .................................................... 1
i. i. i. i. i. i.
Chapter 2
i. An Overview of the Financial System............................................................................. 20
i. i. i. i. i.
Chapter 3
i. What Is Money? ............................................................................................................... 43
i. i.
Chapter 4
i. UnderstandingInterestRates ......................................................................................... 60
i. .i
Chapter 5
i. The Behavior of Interest Rates ......................................................................................... 78
i. i. i. i.
Chapter 6
i. The Risk and Term Structure of Interest Rates .............................................................. 111
i. i. i. i. i. i. i.
Chapter 7
i. The Stock Market, the Theory of Rational Expectations,
i. i. i. i. i. i. i.
and the Efficient Market Hypothesis ............................................................................ 133
i. i. i. i.
Chapter 8
i. An Economic Analysis of Financial Structure ............................................................. 150
i. i. i. i. i.
Chapter 9
i. Financial Crises and the Subprime Meltdown ............................................................. 169
i. i. i. i. i.
Chapter 10
i. Banking and the Management of Financial Institutions ............................................. 181
i. i. i. i. i. i.
Chapter 11
i. Economic Analysis of Financial Regulation ................................................................ 208
i. i. i. i.
Chapter 12
i. Banking Industry: Structure and Competition............................................................ 229
i. i. i. i.
Chapter 13
i. Central Banks and the Federal Reserve System ........................................................... 253
i. i. i. i. i. i.
Chapter 14
i. The Money Supply Process ........................................................................................... 274
i. i. i.
Chapter 15
i. Tools for Monetary Policy ............................................................................................. 319
i. i. i.
Chapter 16
i. The Conduct of Monetary Policy: Strategy and Tactics ............................................... 343
i. i. i. i. i. i. i.
Chapter 17
i. The Foreign Exchange Market...................................................................................... 363
i. i. i.
Chapter 18
i. The International Financial System .............................................................................. 389
i. i. i.
Chapter 19
i. The Demand for Money................................................................................................. 418
i. i. i.
Chapter 20
i. The ISLM Model ............................................................................................................ 440
i. i.
Chapter 21
i. Monetary and Fiscal Policy in the ISLM Model ............................................................ 466
i. i. i. i. i. i. i.
Chapter 22
i. Aggregate Demand and Supply Analysis ................................................................... 493
i. i. i. i.
Chapter 23
i. Transmission Mechanisms of Monetary Policy: The Evidence .................................. 511
i. i. i. i. i. i.
Chapter 24
i. Money and Inflation ...................................................................................................... 529
i. i.
Chapter 25
i. Rational Expectations: Implications for Policy ............................................................ 549
i. i. i. i.
,Chapter1 i.
Why Study Money, Banking, and Financial Markets?
i. i. i. i. i. i.
1.1 Why Study Financial Markets?
i. i. i.
1) Financial markets promote economic efficiency by
i. i. i. i. i. i .
A) channeling funds from investors to savers. i. i. i. i. i.
B) creating inflation. i.
C) channeling funds from savers to investors. i. i. i. i. i.
D) reducing investment. i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
2) Financial markets promote greater economic efficiency by channeling funds from
i. i. i. i. i. i. i. i. i. i. to
i.
.
A) investors; savers i .
B) borrowers; savers i .
C) savers; borrowers i.
D) savers; lenders i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
3) Well-functioning financial markets promote i. i. i.
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D i .
Ques Status: Previous Edition
i. i . i.
4) A key factor in producing high economic growth is
i. i. i. i. i. i. i. i. i .
A) eliminating foreign trade. i. i.
B) well-functioning financial markets. i . i .
C) high interest rates. i. i.
D) stock market volatility. i. i. i.
Answer: B i .
Ques Status: New i. i .
5) Markets in which funds are transferred from those who have excess funds available to those who h
i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.
ave a shortage of available funds are called
i. i. i. i. i. i. i.
A) commodity markets. i.
B) fund-available markets. i .
C) derivative exchange markets. i . i .
D) financial markets. i.
Answer: D i .
Ques Status: Previous Edition
i. i . i.
, 2 Mishkin · The Economics of Money, Banking, and Financial Markets, 9th Edition
i. i. i. i. i. i. i. i. i. i.
i.
6)
markets transfer funds from people who have an excess of available funds to people who h
i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.
ave a shortage.
i. i.
A) Commodity
B) Fund-available
C) Financial
D) Derivative exchange i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
7) Poorly performing financial markets can be the cause of
i. i. i. i. i. i. i. i.
A) wealth.
B) poverty.
C) financial stability. i.
D) financial expansion. i.
Answer: B i .
Ques Status: Previous Edition
i. i . i.
8) The bond markets are important because they are
i. i. i. i. i. i. i. i .
A) easily the most widely followed financial markets in the United States.
i. i. i. i. i. i. i. i. i. i.
B) the markets where foreign exchange rates are determined.
i. i. i. i. i. i. i.
C) the markets where interest rates are determined.
i. i. i. i. i. i.
D) the markets where all borrowers get their funds.
i. i. i. i. i. i. i. i.
E) Answer: C i .
Ques Status: Previous Edition
i. i . i.
9) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $1
i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i . i.
00 per year) is commonly referred to as the
i. i. i. i. i. i. i. i.
A) inflation rate. i.
B) exchange rate. i .
C) interest rate. i.
D) aggregate price level. i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
10) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month
i. i. i. i. i. i. i. i. i. i. i. i. i .
Treasury bills fluctuate i. i. i. and are
i. i. i. on average.
i. i.
A) more; lower i.
B) less; lower i.
C) more; higher i.
D) less;higher .i i.
Answer: A i .
Ques Status: Previous Edition
i. i . i.
KathyKelly i. RichardG.Stahl i. i.
University of Texas, Arlington
i. i. i. Louisiana StateUniversity i. i.
Pearson Addison-Wesley i .
Boston SanFrancisco NewYork i . i. i . i.
London Toronto Sydney Tokyo Singapore Madrid Me
i . i . i . i . i . i.
xicoCity Munich Paris CapeTown HongKong Montreal
i. i . i . i . i. i . i. i .
,Contents
i.
Chapter 1
i. Why Study Money, Banking, and Financial Markets? .................................................... 1
i. i. i. i. i. i.
Chapter 2
i. An Overview of the Financial System............................................................................. 20
i. i. i. i. i.
Chapter 3
i. What Is Money? ............................................................................................................... 43
i. i.
Chapter 4
i. UnderstandingInterestRates ......................................................................................... 60
i. .i
Chapter 5
i. The Behavior of Interest Rates ......................................................................................... 78
i. i. i. i.
Chapter 6
i. The Risk and Term Structure of Interest Rates .............................................................. 111
i. i. i. i. i. i. i.
Chapter 7
i. The Stock Market, the Theory of Rational Expectations,
i. i. i. i. i. i. i.
and the Efficient Market Hypothesis ............................................................................ 133
i. i. i. i.
Chapter 8
i. An Economic Analysis of Financial Structure ............................................................. 150
i. i. i. i. i.
Chapter 9
i. Financial Crises and the Subprime Meltdown ............................................................. 169
i. i. i. i. i.
Chapter 10
i. Banking and the Management of Financial Institutions ............................................. 181
i. i. i. i. i. i.
Chapter 11
i. Economic Analysis of Financial Regulation ................................................................ 208
i. i. i. i.
Chapter 12
i. Banking Industry: Structure and Competition............................................................ 229
i. i. i. i.
Chapter 13
i. Central Banks and the Federal Reserve System ........................................................... 253
i. i. i. i. i. i.
Chapter 14
i. The Money Supply Process ........................................................................................... 274
i. i. i.
Chapter 15
i. Tools for Monetary Policy ............................................................................................. 319
i. i. i.
Chapter 16
i. The Conduct of Monetary Policy: Strategy and Tactics ............................................... 343
i. i. i. i. i. i. i.
Chapter 17
i. The Foreign Exchange Market...................................................................................... 363
i. i. i.
Chapter 18
i. The International Financial System .............................................................................. 389
i. i. i.
Chapter 19
i. The Demand for Money................................................................................................. 418
i. i. i.
Chapter 20
i. The ISLM Model ............................................................................................................ 440
i. i.
Chapter 21
i. Monetary and Fiscal Policy in the ISLM Model ............................................................ 466
i. i. i. i. i. i. i.
Chapter 22
i. Aggregate Demand and Supply Analysis ................................................................... 493
i. i. i. i.
Chapter 23
i. Transmission Mechanisms of Monetary Policy: The Evidence .................................. 511
i. i. i. i. i. i.
Chapter 24
i. Money and Inflation ...................................................................................................... 529
i. i.
Chapter 25
i. Rational Expectations: Implications for Policy ............................................................ 549
i. i. i. i.
,Chapter1 i.
Why Study Money, Banking, and Financial Markets?
i. i. i. i. i. i.
1.1 Why Study Financial Markets?
i. i. i.
1) Financial markets promote economic efficiency by
i. i. i. i. i. i .
A) channeling funds from investors to savers. i. i. i. i. i.
B) creating inflation. i.
C) channeling funds from savers to investors. i. i. i. i. i.
D) reducing investment. i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
2) Financial markets promote greater economic efficiency by channeling funds from
i. i. i. i. i. i. i. i. i. i. to
i.
.
A) investors; savers i .
B) borrowers; savers i .
C) savers; borrowers i.
D) savers; lenders i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
3) Well-functioning financial markets promote i. i. i.
A) inflation.
B) deflation.
C) unemployment.
D) growth.
Answer: D i .
Ques Status: Previous Edition
i. i . i.
4) A key factor in producing high economic growth is
i. i. i. i. i. i. i. i. i .
A) eliminating foreign trade. i. i.
B) well-functioning financial markets. i . i .
C) high interest rates. i. i.
D) stock market volatility. i. i. i.
Answer: B i .
Ques Status: New i. i .
5) Markets in which funds are transferred from those who have excess funds available to those who h
i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.
ave a shortage of available funds are called
i. i. i. i. i. i. i.
A) commodity markets. i.
B) fund-available markets. i .
C) derivative exchange markets. i . i .
D) financial markets. i.
Answer: D i .
Ques Status: Previous Edition
i. i . i.
, 2 Mishkin · The Economics of Money, Banking, and Financial Markets, 9th Edition
i. i. i. i. i. i. i. i. i. i.
i.
6)
markets transfer funds from people who have an excess of available funds to people who h
i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.
ave a shortage.
i. i.
A) Commodity
B) Fund-available
C) Financial
D) Derivative exchange i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
7) Poorly performing financial markets can be the cause of
i. i. i. i. i. i. i. i.
A) wealth.
B) poverty.
C) financial stability. i.
D) financial expansion. i.
Answer: B i .
Ques Status: Previous Edition
i. i . i.
8) The bond markets are important because they are
i. i. i. i. i. i. i. i .
A) easily the most widely followed financial markets in the United States.
i. i. i. i. i. i. i. i. i. i.
B) the markets where foreign exchange rates are determined.
i. i. i. i. i. i. i.
C) the markets where interest rates are determined.
i. i. i. i. i. i.
D) the markets where all borrowers get their funds.
i. i. i. i. i. i. i. i.
E) Answer: C i .
Ques Status: Previous Edition
i. i . i.
9) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $1
i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i . i.
00 per year) is commonly referred to as the
i. i. i. i. i. i. i. i.
A) inflation rate. i.
B) exchange rate. i .
C) interest rate. i.
D) aggregate price level. i. i.
Answer: C i .
Ques Status: Previous Edition
i. i . i.
10) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month
i. i. i. i. i. i. i. i. i. i. i. i. i .
Treasury bills fluctuate i. i. i. and are
i. i. i. on average.
i. i.
A) more; lower i.
B) less; lower i.
C) more; higher i.
D) less;higher .i i.
Answer: A i .
Ques Status: Previous Edition
i. i . i.
