,TABLEQOFQCONTENTS
Part I: MONEY AND ITS PRICES.
1. IntroductionQandQOverview.
2. Money,QMoneyQSupplyQandQInterest.
3. Bonds,QLoanableQFundsQ&QInterestQRates.Q
Q4.QInterestQRatesQinQMoreQDetail.
Part II:MONEYANDOVERALLECONOMY.
5. FinancialQMarketsQthroughQTime.
6. AggregateQSupplyQ&QAggregateQDemand.
QQ7.QBanksQandQMoney.
Part III: CENTRAL BANKS.
8. CentralQBanks.
9. MonetaryQPolicyQTools.
10. TheQMoneyQSupplyQProcess.Q
Q11.QMonetaryQPolicyQ&QDebates
.PartIV: THE BANKING SYSTEM.
12. BankQManagement.
13. BankQRiskQManagementQ&QPerformance.QQ
14.QBankingQRegulation.
Part V: FINANCIAL MARKETS.
15.QMoneyQMarkets.QQ
16.QBondQMarkets.
17.QStockQMarketQ&QEfficiency.QQ1
8.QMortgageQMarket.
PartVI:GLOBALFINANCIALMARKETS.19.FX.
20. GlobalQFinancialQArchitecture.Q Par
t VII: FINANCIAL INSTITUTIONS.
21. ThriftsQandQFinanceQCompanies.Q
Q22.QInsuranceQandQPensions.
23. MutualQFunds.
24. InvestmentQBanksQandQPrivateQEquity.
, CHAPTERQ2:QMoney,QMoneyQSupply,QandQInterest
2-1 SectionQReview
1. WhatQisQtheQdifferenceQbetweenQmoneyQandQcurrency?QWhenQareQtheyQ
theQsame?QWhyQmightQtheyQ bedifferent?
ANS:QMoneyQisQanythingQgenerallyQacceptedQinQexchangeQforQgoodsQ&Qse
rvices.QCurrencyQisQissuedQbyQ aQbankQorQtheQgovernment,QbutQcurrencyQisQ
notQnecessarilyQmoney.QTheyQareQtheQsameQwhenQtheyQareQ acceptedQinQe
xchangeQforQgoodsQandQservices.QCurrenciesQcanQstopQbeingQmoneyQifQpeo
pleQdon’tQ acceptthemQinQexchangeQforQgoodsQandQservices.QIfQaQgroupQof
QpeopleQstopQusingQcurrencyQtoQgetQ goodsQandQservicesQbutQinsteadQuseQ
bananas,QthenQtheQbananasQareQtheQmoney.
2. HowQmanyQpricesQmustQaQbarterQeconomyQhaveQifQtheQeconomyQhasQ
fourQgoods?QWhatQifQitQhasQ 400goods?QExplainQwhyQhavingQaQmoneyQ
inQtheQsecondQcaseQisQbeneficial.
ANS:Q4QgoodsQ=Q6Qprices;Q400QgoodsQ=Q79,800Qprices.QMoneyQallowsQu
sQtoQspecializeQandQreduceQourQ searchcost.Q MoneyQallowsQusQtoQreduceQth
eQnumberQofQstatedQpricesQweQneed.
3. YouQreadQaQnewsQstoryQaboutQaQcountryQthatQisQsufferingQfromQrapid,Qo
ngoingQincreasesQinQtheQcostQ ofliving.QWhichQcharacteristicQofQmoneyQisQbe
ingQdirectlyQnegativelyQimpactedQinQthatQeconomy?
a. UnitQofQaccount
b. MediumQofQexchange
c. StoreQofQvalue
d. DoubleQcoinciden
ceQofQ wantsANS:QC
2-2 SectionQReview
1. BobbyQisQconfused.QHeQstates:Q“SinceQprisonersQareQnotQallowedQtoQsmoke
QinQprisonsQanyQlonger,Q Radford’sQQexamplesQQofQ cigarettesQ inQ POWQ cam
psQ noQ longerQ applies.”Q HowQ wouldQ youQ explainQ toQ BobbyQhowQQRadfor
d’sQ storyQQdemonstratesQQtheQQconceptsQQofQQ theQQcriteriaQQofQQmoney,QQa
sQQwellQ asQQtheQ importanceQofchangesQinQtheQmoneyQsupply?
, ANS:QAnyQassetQthatQisQableQtoQbeQstandardized,Qdivisible,QdurableQandQinQ
demandQcouldQbeQcurrency,QasQ longQ asQ itQ isQ aQ mediumQ ofQ exchange,Q isQ
aQ unitQ ofQ accountQ andQ hasQ storeQ ofQ value.Q CigarettesQ wereQ money.
Part I: MONEY AND ITS PRICES.
1. IntroductionQandQOverview.
2. Money,QMoneyQSupplyQandQInterest.
3. Bonds,QLoanableQFundsQ&QInterestQRates.Q
Q4.QInterestQRatesQinQMoreQDetail.
Part II:MONEYANDOVERALLECONOMY.
5. FinancialQMarketsQthroughQTime.
6. AggregateQSupplyQ&QAggregateQDemand.
QQ7.QBanksQandQMoney.
Part III: CENTRAL BANKS.
8. CentralQBanks.
9. MonetaryQPolicyQTools.
10. TheQMoneyQSupplyQProcess.Q
Q11.QMonetaryQPolicyQ&QDebates
.PartIV: THE BANKING SYSTEM.
12. BankQManagement.
13. BankQRiskQManagementQ&QPerformance.QQ
14.QBankingQRegulation.
Part V: FINANCIAL MARKETS.
15.QMoneyQMarkets.QQ
16.QBondQMarkets.
17.QStockQMarketQ&QEfficiency.QQ1
8.QMortgageQMarket.
PartVI:GLOBALFINANCIALMARKETS.19.FX.
20. GlobalQFinancialQArchitecture.Q Par
t VII: FINANCIAL INSTITUTIONS.
21. ThriftsQandQFinanceQCompanies.Q
Q22.QInsuranceQandQPensions.
23. MutualQFunds.
24. InvestmentQBanksQandQPrivateQEquity.
, CHAPTERQ2:QMoney,QMoneyQSupply,QandQInterest
2-1 SectionQReview
1. WhatQisQtheQdifferenceQbetweenQmoneyQandQcurrency?QWhenQareQtheyQ
theQsame?QWhyQmightQtheyQ bedifferent?
ANS:QMoneyQisQanythingQgenerallyQacceptedQinQexchangeQforQgoodsQ&Qse
rvices.QCurrencyQisQissuedQbyQ aQbankQorQtheQgovernment,QbutQcurrencyQisQ
notQnecessarilyQmoney.QTheyQareQtheQsameQwhenQtheyQareQ acceptedQinQe
xchangeQforQgoodsQandQservices.QCurrenciesQcanQstopQbeingQmoneyQifQpeo
pleQdon’tQ acceptthemQinQexchangeQforQgoodsQandQservices.QIfQaQgroupQof
QpeopleQstopQusingQcurrencyQtoQgetQ goodsQandQservicesQbutQinsteadQuseQ
bananas,QthenQtheQbananasQareQtheQmoney.
2. HowQmanyQpricesQmustQaQbarterQeconomyQhaveQifQtheQeconomyQhasQ
fourQgoods?QWhatQifQitQhasQ 400goods?QExplainQwhyQhavingQaQmoneyQ
inQtheQsecondQcaseQisQbeneficial.
ANS:Q4QgoodsQ=Q6Qprices;Q400QgoodsQ=Q79,800Qprices.QMoneyQallowsQu
sQtoQspecializeQandQreduceQourQ searchcost.Q MoneyQallowsQusQtoQreduceQth
eQnumberQofQstatedQpricesQweQneed.
3. YouQreadQaQnewsQstoryQaboutQaQcountryQthatQisQsufferingQfromQrapid,Qo
ngoingQincreasesQinQtheQcostQ ofliving.QWhichQcharacteristicQofQmoneyQisQbe
ingQdirectlyQnegativelyQimpactedQinQthatQeconomy?
a. UnitQofQaccount
b. MediumQofQexchange
c. StoreQofQvalue
d. DoubleQcoinciden
ceQofQ wantsANS:QC
2-2 SectionQReview
1. BobbyQisQconfused.QHeQstates:Q“SinceQprisonersQareQnotQallowedQtoQsmoke
QinQprisonsQanyQlonger,Q Radford’sQQexamplesQQofQ cigarettesQ inQ POWQ cam
psQ noQ longerQ applies.”Q HowQ wouldQ youQ explainQ toQ BobbyQhowQQRadfor
d’sQ storyQQdemonstratesQQtheQQconceptsQQofQQ theQQcriteriaQQofQQmoney,QQa
sQQwellQ asQQtheQ importanceQofchangesQinQtheQmoneyQsupply?
, ANS:QAnyQassetQthatQisQableQtoQbeQstandardized,Qdivisible,QdurableQandQinQ
demandQcouldQbeQcurrency,QasQ longQ asQ itQ isQ aQ mediumQ ofQ exchange,Q isQ
aQ unitQ ofQ accountQ andQ hasQ storeQ ofQ value.Q CigarettesQ wereQ money.
