Economics 311: Money and Banking

Course Description:

No other sector of the economy is as talked about and as watched as the financial industry. And with good reason, for this market is a barometer of a country's economic welfare. Individual fortunes are made or lost with the swings of financial asset prices and interest rates. Meanwhile, behind the scenes, the market quietly carries out its ultimate purpose— to provide financial capital so that firms can grow. At the aggregate level, their growth leads to growth in the capital stock, thus growth in potential GDP.

The banking sector is an essential part of the workings of a healthy financial sector and, ultimately, a healthy economy for two reasons. First, it acts as an intermediary, bringing together savers and borrowers in a way that reduces the risk of financial transactions. Secondly, in the process of going about their everyday business, banks create—or destroy—money, thereby influencing economic activity at the macro level.

Money and Banking analyzes these financial activities, with an emphasis on the role of the banking sector. Topics covered include the theory of pricing and yields for bonds, money market assets, and financial derivatives; the role of financial intermediaries; operation and regulation of the banking industry; the role of money in the economy, and the functioning of the Federal Reserve system.

Prerequisite: Econ 100

Grades determined by three exams and an extensive research project.