October 3, 2007

chapter twelve

money and banking

CHAPTER OVERVIEW

Chapters 12, 13, and 14 form Part Four of the text, a conventional unit on money and banking. These chapters provide the foundation for the discussion of modern monetary theory and for the discussion and analysis of the monetarist and competing theories that follow.

Chapter 12 introduces the student to the U.S. financial system. The chapter first covers the nature and functions of money and then discusses the Federal Reserve System’s definition of the money supply. Next, the chapter addresses the question of what “backs” money by looking at the value of money, money and prices, and the management of the money supply. Finally, there is a rather comprehensive description of the U.S. financial system, which focuses on the features and functions of the Federal Reserve System and recent developments in the U.S. financial system, including the growth of electronic payments.

INSTRUCTIONAL OBJECTIVES

After completing this chapter, students should be able to:

  1. List and explain the three functions of money.
  2. Define the money supply, M1 and nearmonies, M2, and MZM.
  3. State three reasons why currency and checkable deposits are money and why they have value.
  4. Explain the relationship between the purchasing power of money and the amount of money in circulation.
  5. Describe the structure of the U.S. banking system.
  6. Explain why Federal Reserve Banks are central, quasipublic, and bankers’ banks.
  7. Describe seven functions of the Federal Reserve System and point out which role is the most important.
  8. Summarize and evaluate the arguments for and against the Federal Reserve System remaining an independent institution.
  9. Describe the conditions that have caused the loss of market share of banks and thrifts to pension funds, insurance companies, mutual funds, and securities-related firms.
  10. Identify three major changes continuing to occur in the financial services industry.
  11. Describe and explain the significance of electronic payments.
  12. Define and identify terms and concepts listed at the end of the chapter.

chapter twelve

October 3, 2007

chapter twelve

money and banking

CHAPTER OVERVIEW

Chapters 12, 13, and 14 form Part Four of the text, a conventional unit on money and banking. These chapters provide the foundation for the discussion of modern monetary theory and for the discussion and analysis of the monetarist and competing theories that follow.

Chapter 12 introduces the student to the U.S. financial system. The chapter first covers the nature and functions of money and then discusses the Federal Reserve System’s definition of the money supply. Next, the chapter addresses the question of what “backs” money by looking at the value of money, money and prices, and the management of the money supply. Finally, there is a rather comprehensive description of the U.S. financial system, which focuses on the features and functions of the Federal Reserve System and recent developments in the U.S. financial system, including the growth of electronic payments.

INSTRUCTIONAL OBJECTIVES

After completing this chapter, students should be able to:

  • List and explain the three functions of money.
  • Define the money supply, M1 and nearmonies, M2, and MZM.
  • State three reasons why currency and checkable deposits are money and why they have value.
  • Explain the relationship between the purchasing power of money and the amount of money in circulation.
  • Describe the structure of the U.S. banking system.
  • Explain why Federal Reserve Banks are central, quasipublic, and bankers’ banks.
  • Describe seven functions of the Federal Reserve System and point out which role is the most important.
  • Summarize and evaluate the arguments for and against the Federal Reserve System remaining an independent institution.
  • Describe the conditions that have caused the loss of market share of banks and thrifts to pension funds, insurance companies, mutual funds, and securities-related firms.
  • Identify three major changes continuing to occur in the financial services industry.
  • Describe and explain the significance of electronic payments.
  • Define and identify terms and concepts listed at the end of the chapter.

 
 

Pasted from <http://staffwww.fullcoll.edu/aturner/Chapter%2012,17th.doc>

 
 

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October 2, 2007

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