Machine generated contents note: ch. 1 Introduction -- 1-1.Why Study This Stuff? -- 1-2.The Key Components -- 1-2a.Money and Financial Assets -- 1-2b.Financial Markets -- 1-2c.Central Banks -- 1-2d.Banking System and Financial Institutions -- ch. 2 Money, Money Supply, and Interest -- 2-1.The Concept Of Money -- 2-1a.Money Defined -- 2-1b.Functions of Money -- 2-2.Amount Of Money And Money Through Time -- 2-2a.The Amount of Money Matters -- 2-2b.Money Through Time -- 2-3.Money Supplies -- 2-3a.Monetary Aggregates -- 2-4.The Price Of Money: Interest Rates -- 2-4a.Time Value of Money -- 2-4b.Present Value -- 2-5.Conclusion -- ch. 3 Bonds And Loanable Funds -- 3-1.Bonds Defined And Explained -- 3-1a.Bonds Defined -- 3-2.Bond Prices And Yields -- 3-2a.Price of Bonds -- 3-3.Supply And Demand For Bonds -- 3-3a.The Supply of Bonds -- 3-3b.Change in the Supply of Bonds -- 3-3c.The Demand for Bonds -- 3-3d.Change in the Demand for Bonds -- 3-3e.Equilibrium in the Bond Market -- Note continued: 3-3f.New Equilibrium in the Bond Market -- 3-4.Supply And Demand For Loanable Funds -- 3-4a.The Supply of Loanable Funds -- 3-4b.The Demand for Loanable Funds -- 3-4c.New Equilibrium in the Loanable Funds Market -- 3-5.The Bond Market And Loanable Funds Market Compared -- 3-5a.The Fisher Effect -- 3-5b.Business Cycles and Confidence -- 3-6.Conclusion -- ch. 4 Interest Rates in More Detail -- 4-1.Interest Rates In More Detail And Default Risk -- 4-1a.Default Risk -- 4-1b.Calculating DRP -- 4-1c.Comparing Default Risk of Different Financial Instruments -- 4-2.Real Versus Nominal: The Role Of Inflation -- 4-2a.Why We Worry About Inflation -- 4-2b.Real Versus Nominal Interest Rates -- 4-2c.Ex Post Versus Ex Ante -- 4-2d.Example of Ex Ante Versus Ex Post -- 4-3.Taxes -- 4-3a.Before- and After-Tax Returns -- 4-3b.Municipal Bonds and Taxes -- 4-4.Yield Curves -- 4-4a.Yield Curve Graph -- 4-4b.Yield Curve Facts -- 4-4c.Pure Expectations Theory -- Note continued: 4-4d.Term Premium Theory -- 4-4e.Segmented Market Theory -- 4-5.Yield Curve Applications -- 4-5a.Inverted Yield Curve -- 4-5b.Steep Yield Curve -- 4-5c.Flat Yield Curve -- 4-6.Conclusion -- ch. 5 Financial Markets Through Time -- 5-1.US Financial Markets In The Early Twentieth Century -- 5-1a.The Early Twentieth Century -- 5-1b.The Panic of 1907 -- 5-2.Federal Reserve In The Early Days -- 5-2a.Early Structure of the Federal Reserve -- 5-2b.Financial Markets During the Great Depression -- 5-3.Financial Markets During World War II -- 5-3a.Preparing for War -- 5-3b.Funding the War Effort -- 5-3c.Controlling Inflation During the War -- 5-4.Postwar Boom: Home Mortgages, Consumerism, And European Unification -- 5-4a.Financial Markets Help Fund the "American Dream" -- 5-4b.Push for European Economic and Financial Integration -- 5-5.Effects Of Stagflation And The Reagan/Thatcher Revolution On Financial Markets -- 5-5a.The Rise of Stagflation -- Note continued: 5-5b.Paul Volcker -- 5-5c.Reagan and Thatcher -- 5-6.Savings & Loans And Junk Bonds -- 5-6a.The Savings & Loan Crisis -- 5-6b.Leveraged Buyouts and Junk Bonds -- 5-7.Conclusion -- ch. 6 Aggregate Supply And Aggregate Demand -- 6-1.Introduction And Keynes's Aggregate Demand -- 6-1a.Keynes's Challenge -- 6-1b.Keynes's Aggregate Demand -- 6-2.Shifts In Aggregate Demand -- 6-2a.Changes in Consumption -- 6-2b.Changes in Investment -- 6-2c.Changes in Government Spending -- 6-2d.Changes in Net Exports -- 6-2e.Changes in the Money Supply -- 6-2f.Keynes's Spending Multiplier -- 6-3.Aggregate Supply -- 6-3a.Keynes's Original Aggregate Supply Curve -- 6-3b.Keynesian Three-Part Aggregate Supply -- 6-4.The Rational Expectations Approach To AS/AD -- 6-4a.Changing Assumptions -- 6-4b.A Different Approach to Aggregate Supply -- 6-5.Business Cycles -- 6-5a.Bringing Together Aggregate Demand, SRAS, and LRAS -- 6-5b.Business Cycles: How Fast Do Gaps Close? -- Note continued: 6-6.Conclusion -- ch. 7 Banks And Money -- 7-1.Why Banks Exist: Asymmetric Information -- 7-1a.Asymmetric Information -- 7-2.Adverse Selection In Financial Markets -- 7-2a.Overcoming Adverse Selection in Financial Markets -- 7-3.Moral Hazard -- 7-3a.Moral Hazard in Corporate Governance -- 7-3b.Moral Hazard in Financial Markets -- 7-3c.Overcoming the Moral Hazard Problem in Financial Markets -- 7-4.What Banks Do -- 7-4a.Provide Liquidity -- 7-4b.Reduce Transaction Costs -- 7-4c.Block Lending -- 7-5.Simple Deposit Multiplier -- 7-5a.Day 1 at Anchor Bank -- 7-5b.Day 2 at Anchor Bank -- 7-6.What The Simple Deposit Multiplier Tells Us And Its Problems -- 7-6a.Banks Create and Destroy Money -- 7-6b.Banks Are Subject to Bank Runs -- 7-6c.If Banks Don't Lend -- 7-6d.If There Is a Lack of Banks -- 7-6e.Problems with the Simple Deposit Multiplier -- 7-7.Conclusion -- ch. 8 Central Banks -- 8-1.Evolution Of The Fed -- 8-1a.Evolution of the Federal Reserve -- Note continued: 8-2.Current Structure Of The Fed -- 8-2a.The Chair -- 8-2b.Board of Governors -- 8-2c.Federal Reserve District Banks -- 8-2d.Federal Open Market Committee -- 8-3.Responsibilities, Functions, And Balance Sheet Of The Fed -- 8-3a.Responsibilities of the Fed -- 8-3b.The Fed's Balance Sheet -- 8-4.Other Central Banks: Bank Of Japan And Bank Of England -- 8-4a.Bank of Japan -- 8-4b.Bank of England -- 8-5.Other Central Banks: European Central Bank And Bank Of Canada -- 8-5a.European Central Bank -- 8-5b.Bank of Canada -- 8-6.Conclusion -- ch. 9 Monetary Policy Tools -- 9-1.Overview -- 9-1a.Open Market Operations as a Monetary Tool -- 9-2.Monetary Policy Tools: Discount Window And Term Auction Facility -- 9-2a.When Traditional Policies Fail -- 9-3.Monetary Policy Tools: Emergency Lending, Quantitative Easing, And The Required Reserve Ratio -- 9-3a.Emergency Lending -- 9-3b.Quantitative Easing -- 9-3c.Required Reserve Ratio -- Note continued: 9-4.Problem With Tools: Money Demand -- 9-4a.Irving Fisher on Money Demand -- 9-4b.John Maynard Keynes on Money Demand -- 9-5.Problems With Tools: Liquidity Traps And Budget Deficits -- 9-5a.Liquidity Traps -- 9-5b.Government Budget Deficits and Monetary Policy -- 9-6.Tools Of The European Central Bank -- 9-6a.ECB's OMO: Tenders and Reserve Transactions -- 9-6b.ECB's Deposit Facility -- 9-6c.ECB's Minimum Reserve Requirements -- 9-7.Conclusion -- ch. 10 The Money Supply Process -- 10-1.The Money Supply Process -- 10-1a.Monetary Base -- 10-1b.Changes in the Monetary Base -- 10-2.More Changes In The Monetary Base And The Money Supply Multiplier -- 10-2a.How the Nonbank Public Affects the Monetary Base -- 10-2b.How the Treasury Affects the Monetary Base -- 10-2c.Deriving the Money Multiplier -- 10-3.Changes In Variables Of The Money Supply Multiplier And The Great Recession -- 10-3a.Change in the Currency Ratio -- 10-3b.Change in the Excess Reserves Ratio -- Note continued: 10-3c.Change in the Required Reserves Ratio -- 10-3d.Money Supply Process and Quantitative Easing -- 10-4.Conclusion -- ch. 11 Monetary Policy and Debates -- 11-1.Monetary Policy And Debates -- 11-1a.Goals of Monetary Policy -- 11-2.More Goals Of Monetary Policy -- 11-2a.High Employment Goal -- 11-26.Financial Market Stability: Interest Rates and Exchange Rates -- 11-3.More Debates Over Monetary Policy -- 11-3a.Central Bank Independence -- 11-3b.Instruments and Targets -- 11-4.Taylor Rule -- 11-4a.Taylor Rule and Inflation -- 11-4b.Taylor Rule and Output Gap -- 11-4c.Mankiw Rule: An Alternative to the Taylor Rule -- 11-5.Monetary Policy And The Crisis -- 11-6.Conclusion -- ch. 12 Bank Management -- 12-1.Bank Management: Balance Sheets -- 12-1a.Asset Transformation -- 12-1b.Bank Management: The Big Picture -- 12-2.Bank Deposits And Other Liabilities -- 12-2a.Transaction Deposits -- 12-2b.Nontransaction Accounts -- 12-2c.Other Liabilities -- Note continued: 12-3.Bank Loans And Other Assets -- 12-3a.Cash -- 12-3b.Securities -- 12-3c.Bank Loans -- 12-4.Off Balance Sheet Activities -- 12-4a.Commercial Letters of Credit -- 12-4b.Standby Letters of Credit -- 12-4c.F