Solution Manual for Economics of Money, Banking and Financial Markets Global Edition, 10th Edition

Name: Solution Manual for Economics of Money, Banking and Financial Markets Global Edition, 10th Edition
Brand: Academic Documents Platform
Price: 16.99 USD
Availability: InStock
Author: Mia Johnson

Solution Manual for Economics of Money, Banking and Financial Markets Global Edition, 10th Edition provides expert-verified solutions to help you study smarter.

Mia Johnson

Contributor

4.5

106

about 2 months ago

Preview (31 of 218)

Instructor’s Manual
for
The Economics of Money, Banking,
and Financial Markets
Tenth Edition
Global Edition
Frederic S. Mishkin
Columbia University

iii
Contents
Preface.................................................................................................................................................... v
Part One How to Use the Instructor’s Manual and Other Textbook Ancillaries ...................... 1
Organization of the Instructor’s Manual ................................................................................................ 3
Alternative Course Outlines ................................................................................................................... 5
Overviews of the Textbook Chapters and Teaching Tips ...................................................................... 9
Answers to End-of-Chapter Problems .................................................................................................... 10
PowerPoint Presentation......................................................................................................................... 11
Test Bank................................................................................................................................................ 12
Course Management with MyEconLab .................................................................................................. 13
The Mishkin Companion Web Site ........................................................................................................ 14
Readings in Money, Banking, and Financial Markets (Online Reader)................................................. 15
Study Guide ............................................................................................................................................ 21
Part Two Overviews of the Textbook Chapters and Teaching Tips ............................................ 23
Part Three Answers to End-of-Chapter Problems........................................................................... 59
Part Four Transparency Masters: Chapter Outlines .................................................................... 163

v
Preface
From my experience, the demands for good teaching have increased dramatically in recent years. To aid
instructors in this challenging environment, I have worked hard to make this Instructor’s Manual a valuable
teaching aid that should help save you time in preparing your class.
Rather than proceeding chapter by chapter, this Instructor’s Manual is broken into four parts. Part One
contains pedagogic suggestions on such topics as how to organize the course and how to use the ancillaries.
Part Two offers chapter overviews and teaching tips that I have found useful in the classroom. Part Three
contains the answers and solutions to the end-of-chapter problems. Part Four provides the transparency
masters for the chapter outlines. I have found that this organizational structure makes it easy to use the
Instructor’s Manual.
I believe that this Instructor’s Manual will be an extremely valuable tool in teaching the money and banking
course. I would appreciate any suggestions or comments for improving the manual. Please direct all
correspondence to me at the address below:
Frederic S. Mishkin
Graduate School of Business
Uris Hall 817
Columbia University
New York, NY 10027

Loading page 4...

Loading page 5...

Loading page 6...

3
Organization of the Instructor’s Manual
To help instructors cope with the increased demands for good teaching in recent years, The Economics
of Money, Banking, and Financial Markets, Tenth Edition, includes the most comprehensive package
of supplementary materials of any money, banking, and financial markets textbook. As part of these
supplemental materials, I have designed the Instructor’s Manual to help save you time in preparing
class materials, such as class outlines, solutions to homework problems, lecture notes, and overhead
transparencies.
This Instructor’s Manual is divided into four parts. Part One discusses how to use the Instructor’s Manual
and the other textbook ancillaries to make your teaching of the money and banking course both more
effective and less time-consuming. Part Two contains an overview of all the textbook chapters along
with teaching tips that I have found effective. Part Three contains the answers to the end-of-chapter
problems for use by the instructor to prepare solution sets for the problems he or she assigns to the
students as problem sets. Part Four contains transparency masters of chapter outlines, which can be
used either to make overhead transparencies for use in class or to make handouts for the students.
To obtain any of the available ancillaries, adopters of the text just need to get in touch with their
Pearson sales representative, or alternatively they can visit the Instructor’s Resource Center at
www.pearsonglobaleditions.com/mishkin.

Loading page 7...

Loading page 8...

5
Alternative Course Outlines
There are many different ways to teach a course on money, banking, and financial markets. For this reason,
the material in The Economics of Money, Banking, and Financial Markets, Tenth Edition, has been arranged
with flexibility in mind, so that many teaching styles can be accommodated. The following sections suggest
sample outlines for four main approaches to teaching money, banking, and financial markets, showing how
the text can be adapted to each approach, as well as to quarter and semester teaching schedules. Note,
however, that many variations on these outlines are possible.
◼ Outline for General Money and Banking Course
Core Chapters
Chapter No. Chapter Title
1. Why Study Money, Banking, and Financial Markets?
2. An Overview of the Financial System
3. What Is Money?
4. Understanding Interest Rates
5. The Behavior of Interest Rates
11. Banking and the Management of Financial Institutions
12. Economic Analysis of Financial Regulation
13. Banking Industry: Structure and Competition
14. Central Banks: A Global Perspective
16. Tools of Monetary Policy
17. The Conduct of Monetary Policy: Strategy and Tactics
23. Aggregate Demand and Supply Analysis
24. Monetary Policy Theory
For a one-semester course, cover any six of the following optional chapters:
Chapter No. Chapter Title
6. The Risk and Term Structure of Interest Rates
7. The Stock Market, the Theory of Rational Expectations, and the
Efficient Market Hypothesis
8. An Economic Analysis of Financial Structure
9. Financial Crises in Advanced Economies
10. Financial Crises in Emerging Market Economies
15. The Money Supply Process
18. The Foreign Exchange Market
19. The International Financial System
20. Quantity Theory, Inflation, and the Demand for Money
21. The IS Curve
22. The Monetary Policy and Aggregate Demand Curves
25. The Role of Expectations in Monetary Policy
26. Transmission Mechanisms of Monetary Policy

Loading page 9...

Loading page 10...

Loading page 11...

6 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
◼ Outline for General Money and Banking Course
with an International Emphasis
Core Chapters
Chapter No. Chapter Title
1. Why Study Money, Banking, and Financial Markets?
2. An Overview of the Financial System
3. What Is Money?
4. Understanding Interest Rates
5. The Behavior of Interest Rates
11. Banking and the Management of Financial Institutions
12. Economic Analysis of Financial Regulation
13. Banking Industry: Structure and Competition
14. Central Banks: A Global Perspective
16. Tools of Monetary Policy
17. The Conduct of Monetary Policy: Strategy and Tactics
18. The Foreign Exchange Market
19. The International Financial System
23. Aggregate Demand and Supply Analysis
24. Monetary Policy Theory
For a one-semester course, cover any four of the following optional chapters:
Chapter No. Chapter Title
6. The Risk and Term Structure of Interest Rates
7. The Stock Market, the Theory of Rational Expectations, and the
Efficient Market Hypothesis
8. An Economic Analysis of Financial Structure
9. Financial Crises in Advanced Economies
10. Financial Crises in Emerging Market Economies
15. The Money Supply Process
20. Quantity Theory, Inflation, and the Demand for Money
21. The IS Curve
22. The Monetary Policy and Aggregate Demand Curves
25. The Role of Expectations in Monetary Policy
26. Transmission Mechanisms of Monetary Policy
A one-quarter course would probably not include any other chapters unless some of the chapters on
central banking and the conduct of monetary policy (Chapters 14, 16, and 17) were deleted.

Loading page 12...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 7
◼ Outline for Financial Markets and Institutions Course
Core Chapters
Chapter No. Chapter Title
1. Why Study Money, Banking, and Financial Markets?
2. An Overview of the Financial System
3. What Is Money?
4. Understanding Interest Rates
5. The Behavior of Interest Rates
6. The Risk and Term Structure of Interest Rates
7. The Stock Market, the Theory of Rational Expectations, and the
Efficient Market Hypothesis
8. An Economic Analysis of Financial Structure
9. Financial Crises in Advanced Economies
10. Financial Crises in Emerging Market Economies
11. Banking and the Management of Financial Institutions
12. Economic Analysis of Financial Regulation
13. Banking Industry: Structure and Competition
For a one-semester course, cover any seven of the following optional chapters:
Chapter No. Chapter Title
14. Central Banks: A Global Perspective
15. The Money Supply Process
16. Tools of Monetary Policy
17. The Conduct of Monetary Policy: Strategy and Tactics
18. The Foreign Exchange Market
19. The International Financial System
20. Quantity Theory, Inflation, and the Demand for Money
21. The IS Curve
22. The Monetary Policy and Aggregate Demand Curves
23. Aggregate Demand and Supply Analysis
24. Monetary Policy Theory
25. The Role of Expectations in Monetary Policy
26. Transmission Mechanisms of Monetary Policy
A one-quarter course would probably only include one or two of the optional chapters.

Loading page 13...

8 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
◼ Outline for Monetary Theory and Policy Course
Core Chapters
Chapter No. Chapter Title
1. Why Study Money, Banking, and Financial Markets?
2. An Overview of the Financial System
3. What Is Money?
4. Understanding Interest Rates
5. The Behavior of Interest Rates
14. Central Banks: A Global Perspective
15. The Money Supply Process
16. Tools of Monetary Policy
17. The Conduct of Monetary Policy: Strategy and Tactics
23. Aggregate Demand and Supply Analysis
24. Monetary Policy Theory
25. The Role of Expectations in Monetary Policy
26. Transmission Mechanisms of Monetary Policy
For a one-semester course, cover any six of the following optional chapters:
Chapter No. Chapter Title
6. The Risk and Term Structure of Interest Rates
7. The Stock Market, the Theory of Rational Expectations, and the
Efficient Market Hypothesis
8. An Economic Analysis of Financial Structure
9. Financial Crises in Advanced Economies
10. Financial Crises in Emerging Market Economies
11. Banking and the Management of Financial Institutions
12. Economic Analysis of Financial Regulation
13. Banking Industry: Structure and Competition
18. The Foreign Exchange Market
19. The International Financial System
20. Quantity Theory, Inflation, and the Demand for Money
21. The IS Curve
22. The Monetary Policy and Aggregate Demand Curves
A one-quarter course would probably only include three or four of the optional chapters.

Loading page 14...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 9
Overviews of the Textbook Chapters
and Teaching Tips
I have been teaching money and banking now for over thirty years. The overviews and teaching tips in
Part Two of the Instructor’s Manual are intended to share with you some of my experiences in the
classroom with teaching the material in the textbook. The overview and teaching tips for each chapter
provide a brief description of the contents of the chapter, discuss the novel features of the chapter, indicate
what central points need to be transmitted to the student, suggest teaching tips that I have found useful in
class, and provide guidance as to what material can easily be skipped in each chapter.

Loading page 15...

10 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
Answers to End-of-Chapter Problems
Part Three of the Instructor’s Manual contains the answers to end-of-chapter problems. Some of these
questions require students to look up current data, and in these cases no answers are given; however, for
the rest of the questions, the answers are quite complete.
Many instructors will use the end-of-chapter questions for homework assignments, as I do. I have found it
useful to hand out answers to the questions provided in Part Three to the students as solutions sets after they
have completed their assignments; they find them to be an invaluable study aid. Making up these solution
sets for reproduction should be quite easy, either by cutting and pasting from Part Three or downloading
the files from the Instructor’s Resource Center at www.pearsonglobaleditions.com/mishkin.

Loading page 16...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 11
PowerPoint Presentation
Also offered in the instructor’s supplement package is a PowerPoint Presentation that contains lecture notes
and all the textbook’s figures and tables. These slides are comprehensive and outline all the major points
covered in the text. The lecture notes have been class-tested successfully—they are the ones that I use in
class—and they should help other instructors prepare their lectures as they have helped me.
Please note that unless you have access to PowerPoint version 4.0 or higher you will only be able to project
the provided images using the viewer that is included; editing or adding material will not be possible unless
you have the software program.
To obtain the PowerPoint files, adopters of the text just need to get in touch with their Pearson sales
representative, or visit the Instructor’s Resource Center at www.pearsonglobaleditions.com/mishkin to
download the available electronic files.

Loading page 17...

12 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
Test Bank
The Test Bank contains over 2,500 multiple-choice questions that are appropriate for use
as quiz or test questions. It is provided as a set of Word files in Macintosh and Windows versions,
as well as a set of .BOK Testgen files. It can be downloaded from the Instructor’s Resource Center
at www.pearsonglobaleditions.com/mishkin. These forms provide alternative methods for the instructor to
make up exams.
The Pearson TestGen program offered is a computerized test generator that lets you construct tests by
choosing questions from the Test Bank that was prepared specifically for this textbook and your course.
The test construction process involves the use of a simple TestGen screen that you fill in on the computer
to choose questions for your test. If desired, test questions can be viewed on the screen, and test questions
can be edited, saved, or printed. In addition, you can add questions, which may include graphics.
The program features:
The Test Bank can include four types of questions: multiple choice, true/false, short answer, and
essay.
A supplementary page attached to each Test Bank question can contain its topic, objective, skill,
difficulty, and other user-added information.
Test questions can be chosen in a variety of ways including manual selection, random selection,
choose while viewing, and choose by searching.
Questions chosen for a test can be viewed and edited without affecting the original versions of the
questions in the item bank.
Test size is limited only by the memory size of the computer and the length of the questions you choose.
Test questions can be printed in the exact order you specify or grouped and sorted automatically by
the program.
Printer files can be created or modified to take advantage of the capabilities of your printer.

Loading page 18...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 13
Course Management with MyEconLab
MyEconLab delivers rich online content and innovative learning tools to your classroom. Instructors who
use MyEconLab gain access to powerful communication and assessment tools, and their students receive
access to the additional learning resources described below.
Students and MyEconLab
MyEconLab delivers the content and tools your students need to succeed online. Students whose instructors
use MyEconLab gain access to a variety of study and practice tools that put them in control of their own
learning:
• Practice tests enable students to check their understanding and identify areas in which they need to do
further work.
• A personalized study plan based on test results will show students where further study is needed.
• Interactive exercises based on specific end-of-chapter questions as well as general topics allow the
student to review the material at any time. Some exercises require students to draw a graph.
• The textbook is online, with key figures.
• A selection of Readings in Money, Banking, and Financial Markets, regularly updated by me
and James W. Eaton of Bridgewater College, provides current articles related to topics covered
in the textbook.
• Each week during the semester, students will be asked to read an article from a major online news
source and answer questions on it. This is an effective and natural way to bring current events into
the classroom.
• Sample quizzes give students a chance to double-check their understanding and application of the main
topics in each test chapter.
• Supplements to the textbook, such as chapter synopses, glossary flashcards, and links to other Web sites,
help instructors to expand on the material.
Instructors and MyEconLab
With MyEconLab instructors can customize existing content and add their own. They can manage, create,
and assign tests to students, choosing from the exercises in the Study Plan as well as from our Test Banks.
MyEconLab also includes advanced tracking features that record students’ usage and performance and a
Gradebook feature to see students’ test results. Please contact your Pearson sales representative to see how
MyEconLab can work for your course.

Loading page 19...

14 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
The Mishkin Companion Website
The Companion Website for The Economics of Money, Banking, and Financial Markets, Tenth Edition,
at www.pearsonglobaleditions.com/mishkin, offers a brief chapter preview, a review quiz, links to related
Web sites, and glossary flashcards. Other features such as the electronic textbook and interactive
exercises are only available via MyEconLab.

Loading page 20...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 15
Readings in Money, Banking, and Financial Markets
(Online Reader)
A basic problem of textbooks in the money and banking field is that current events and financial innovation
make many of the facts in the textbook obsolete soon after publication. To minimize this problem, The
Economics of Money, Banking, and Financial Markets, Tenth Edition, focuses less on a set of facts, but
rather stresses the underlying principles to understand money, banking, and financial markets. The advantage
to this approach is that these principles never become obsolete, and as a result, the material in the text
continues to promote understanding of the financial system as it evolves over time.
Because of the emphasis on basic principles, the text works extremely well when it is supplemented by
current readings on banking and financial markets. To make it easy for instructors to supplement the text
with current readings, Pearson publishes an annual Readings book online, designed to supplement the text
and edited by James W. Eaton of Bridgewater College and me. The Readings collection is unique in that it
is updated over the life of this edition of the textbook, with well over half of the articles new with each
update. In addition, it includes summaries of the articles, provides suggestions for which textbook
chapter(s) the reading might be assigned, and contains discussion questions that follow each reading in
order to encourage students to think about how the reading relates to material in the text. The Readings
should enable instructors to keep the subject matter of their course current throughout the life of the
edition of the text.
To provide you with a better feel for what the Readings comprise, the most current table of contents is
provided on the next several pages.

Loading page 21...

16 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
Readings for Money, Banking,
and Financial Markets*
Reading 1
“Is U.S. Federal Debt Too Large?” Pedro Amaral, Economic Commentary, No. 2010–10, Federal Reserve
Bank of Cleveland, August 24, 2010.
Reading 2
“Evaluating the Relative Strength of the U.S. Capital Markets.” Stavros Peristiani, Current Issues in
Economics and Finance 13(6), Federal Reserve Bank of New York, June 2007.
Reading 3
“The Fate of One-Dollar Coins in the U.S.” Sébastien Lotz and Guillaume Rocheteau, Economic
Commentary, Federal Reserve Bank of Cleveland, October 15, 2004.
Reading 4
“Are Consumers Cashing Out?” Paul W. Bauer and Daniel Littman, Economic Commentary, Federal
Reserve Bank of Cleveland, October 1, 2007.
Reading 5
“Inflation Expectations: How the Market Speaks.” Simon Kwan, FRBSF Economic Letter No. 2005–25,
Federal Reserve Bank of San Francisco, October 3, 2005.
Reading 6
“Flight to Safety and U.S. Treasury Securities.” Bryan Noeth and Rajdeep Sengupta, Regional Economist,
Federal Reserve Bank of St. Louis, July 2010, 18–19.
Reading 7
“The Yield Curve as a Leading Indicator: Some Practical Issues.” Arturo Estrella and Mary R. Trubin,
Current Issues in Economics and Finance 12(5), Federal Reserve Bank of New York, July/August 2006.
Reading 8
“How Economic News Moves Markets.” Leonardo Bartolini, Linda Goldberg, and Adam Sacarny,
Current Issues in Economics and Finance 14(6), Federal Reserve Bank of New York, August 2008.
Reading 9
“The Price Is Right?” Renee Courtois, Region Focus, Federal Reserve Bank of Richmond,
Fall 2009, 16–19, 34.
Reading 10
“For Better and For Worse: Three Lending Relationships.” Mitchell Berlin, Business Review, Federal
Reserve Bank of Philadelphia, November/December 1996, 3–12.
Reading 11
“How Will a Credit Crunch Affect Small Business Finance?” Gregory F. Udell, FRBSF Economic Letter
No. 2009–09, Federal Reserve Bank of San Francisco, March 6, 2009.
*Please note that these are from the 2010 Reader to give you a feel for the type of articles chosen. The 2012 reading selections will be available in
MyEconLab. Articles will also be updated periodically.

Loading page 22...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 17
Reading 12
“Compensation and Risk Incentives in Banking and Finance.” Jian Cai, Kent Cherny, Todd Milbourn,
Economic Commentary, No. 2010–13, Federal Reserve Bank of Cleveland, September 14, 2010.
Reading 13
“Going Private.” Vanessa Sumo, Region Focus, Federal Reserve Bank of Richmond, Winter 2008, 12–17.
Reading 14
“Perils of Price Deflation: An Analysis of the Great Depression.” Charles T. Carlstrom and Timothy S.
Fuerst, Economic Commentary, Federal Reserve Bank of Cleveland, February 15, 2001.
Reading 15
“Predicting Crises, Part I: Do Coming Crises Cast Their Shadows Before?” Bharat Trehan, FRBSF
Economic Letter, No. 2009–29, Federal Reserve Bank of San Francisco, September 21, 2009.
Reading 16
“Reforming the Raters.” Renee Courtois, Region Focus, Federal Reserve Bank of Richmond,
Spring 2009, 14–19.
Reading 17
“Mortgage-Backed Securities: How Important Is ‘Skin in the Game’?” Christopher M. James, FRBSF
Economic Letter, No. 2010–37, Federal Reserve Bank of San Francisco, December 13, 2010.
Reading 18
“De-Leveraging and the Financial Accelerator: How Wall Street Can Shock Main Street.” Satyajit
Chatterjee, Business Review, Federal Reserve Bank of Philadelphia, Second Quarter 2010, 1–8.
Reading 19
“Capital Cushions: The Basel Accords and Bank Risk.” Stephen Slivinski, Region Focus, Federal Reserve
Bank of Richmond, Spring 2009, 6–9.
Reading 20
“Why Economists Still Worry About Bank Runs.” Doug Campbell, Region Focus, Federal Reserve Bank
of Richmond, Fall 2005, 36–38.
Reading 21
“Addressing TBTF by Shrinking Financial Institutions: An Initial Assessment.” Gary H. Stern and Ron
Feldman, The Region, Federal Reserve Bank of Minneapolis, June 2009, 8–13.
Reading 22
“The Costs and Benefits of Bank Supervisory Disclosure.” Edward Simpson Prescott and Stephen
Slivinski, Economic Brief EB09–05, Federal Reserve Bank of Richmond, May 2009.
Reading 23
“If Fed Becomes Super Regulator, Politicians Would Be Its Kryptonite.” Sharon K. Blei, The Regional
Economist, Federal Reserve Bank of St. Louis, January 2009, 14–15.
Reading 24
“Federal Preemption of State Bank Regulation: A Conference Panel Summary.” Erin Davis and Tara Rice,
Chicago Fed Letter 230a, Federal Reserve Bank of Chicago, September 2006.

Loading page 23...

18 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
Reading 25
“Out from the Shadows: The Run on Shadow Banking and a Framework for Reform.” Renee Courtois
Haltom, Region Focus, Federal Reserve Bank of Richmond, Third Quarter 2010, 22–25.
Reading 26
“U.S. Monetary Policy: An Introduction. Part 2: What Are the Goals of U.S. Monetary Policy?” FRBSF
Economic Letter No. 2004–02, Federal Reserve Bank of San Francisco, January 23, 2004.
Reading 27
“How’s Business? The Role of the Beige Book in Fed Policymaking.” Renee Courtois, Region Focus,
Federal Reserve Bank of Richmond, Summer 2009, 5–7.
Reading 28
“Explaining Bank Credit Crunches and Procyclicality.” Robert R. Bliss and George G. Kaufman, Chicago
Fed Letter No. 179, Federal Reserve Bank of Chicago, July 2002.
Reading 29
“Why Are Banks Holding So Many Excess Reserves?” Todd Keister and James J. McAndrews, Current
Issues in Economics and Finance, 15 (8), Federal Reserve Bank of New York, December 2009.
Reading 30
“Federal Reserve Liquidity Programs: An Update.” Niel Williardson and LuAnne Pederson, The Region,
Federal Reserve Bank of Minneapolis, June 2010, 14–25.
Reading 31
“Quantitative Easing: Entrance and Exit Strategies.” Alan S. Blinder, Review, Federal Reserve Bank of
St. Louis, November/December 2010, 465–79.
Reading 32
“Monetary Policy in a World with Interest on Reserves.” Charles T. Carlstrom and Timothy Fuerst,
Economic Commentary, No. 2010–4, Federal Reserve Bank of Cleveland, June 10, 2010.
Reading 33
“Conducting Monetary Policy when Interest Rates Are Near Zero.” Charles T. Carlstrom and Andrea
Pescatori, Economic Commentary, Federal Reserve Bank of Cleveland, October 2009.
Reading 34
“Disagreement about the Inflation Outlook.” Sylvain LeDuc, Glenn D. Rudebusch, and Justin Weidner,
FRBSF Economic Letter, No. 2009–31, Federal Reserve Bank of San Francisco, October 5, 2009.
Reading 35
“Reflections on Monetary Policy: Flexibility, Transparency, and Inflation.” Michael H. Moskow, Chicago
Fed Letter No. 230, Federal Reserve Bank of Chicago, September 2006.
Reading 36
“Publishing Central Bank Interest Rate Forecasts.” Glenn D. Rudebusch, FRBSF Economic Letter
No. 2008–02, Federal Reserve Bank of San Francisco, January 25, 2008.
Reading 37
“U.S. Monetary Policy: An Introduction. Part 4: How Does the Fed Decide the Appropriate Setting for
the Policy Instrument?” FRBSF Economic Letter No. 2004–04, Federal Reserve Bank of San Francisco,
February 6, 2004.

Loading page 24...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 19
Reading 38
“The Taylor Rule: A Guidepost for Monetary Policy?” Charles T. Carlstrom and Timothy S. Fuerst,
Economic Commentary, Federal Reserve Bank of Cleveland, July 2003.
Reading 39
“Interest Rates, Carry Trades, and Exchange Rate Movements.” Michele Cavallo, FRBSF Economic Letter
No. 2006–31, Federal Reserve Bank of San Francisco, November 17, 2006.
Reading 40
“An Anchor of Gold.” Stephen Slivinski, Region Focus, Federal Reserve Bank of Richmond, Second
Quarter 2010, 5–7.
Reading 41
“Is the International Role of the Dollar Changing?” Linda S. Goldberg, Current Issues in Economics and
Finance, 16 (1), Federal Reserve Bank of New York, January 2010.
Reading 42
“Dollarization Explained.” Stephen Slivinski, Region Focus, Federal Reserve Bank of Richmond,
Fall 2008, 2–5.
Reading 43
“The Greek Crisis: Argentina Revisited?” Fernanda Nechio, FRBSF Economic Letter, No. 2010–33,
Federal Reserve Bank of San Francisco, November 1, 2010.
Reading 44
“Raising Capital: The Role of Sovereign Wealth Funds.” Anna L. Paulson, Chicago Fed Letter, No. 258,
Federal Reserve Bank of Chicago, January 2009.
Reading 45
“What We Do and Don’t Know about Discretionary Fiscal Policy.” Renee Courtois, Economic Brief
EB09–04, Federal Reserve Bank of Richmond, April 2009.
Reading 46
“Can the Nation Stimulate Its Way to Prosperity?” Jason Saving, Economic Letter 5 (8), Federal Reserve
Bank of Dallas, August 2010.
Reading 47
“The Great Moderation: Good Luck, Good Policy, or Less Oil Dependence?” Andrea Pescatori, Economic
Commentary, Federal Reserve Bank of Cleveland, March 2008.
Reading 48
“U.S. Monetary Policy: An Introduction. Part 3: How Does Monetary Policy Affect the U.S. Economy?”
FRBSF Economic Letter No. 2004–03, Federal Reserve Bank of San Francisco, January 30, 2004.
Reading 49
“Regulatory and Monetary Policies Meet ‘Too Big to Fail’.” Harvey Rosenblum, Jessica J. Renier, and
Richard Alm, Economic Letter 5 (3), Federal Reserve Bank of Dallas, April 2010.
Reading 50
“Why Policymakers Might Care about Stock Market Bubbles.” Paul Gomme, Economic Commentary,
Federal Reserve Bank of Cleveland, May 15, 2005.

Loading page 25...

20 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
Reading 51
“Rising Relative Prices or Inflation: Why Knowing the Difference Matters.” Owen F. Humpage,
Economic Commentary, Federal Reserve Bank of Cleveland, June 2008.
Reading 52
“Do Deficits Matter? And, If So, How?” Stephen Slivinski, Region Focus, Federal Reserve Bank of
Richmond, Second Quarter 2010, 12–15.
Reading 53
“Getting Back on Track: Macroeconomic Policy Lessons from the Financial Crisis.” John B. Taylor,
Review, Federal Reserve Bank of St. Louis, May/June 2010, 165–76.
Reading 54
“Sticky Situation.” Doug Campbell, Region Focus, Federal Reserve Bank of Richmond,
Spring 2005, 20–23.
Reading 55
“Activist Monetary Policy For Good or Evil? The New Keynesians vs. the New Classicals.” Tom Stark
and Herb Taylor, Business Review, Federal Reserve Bank of Philadelphia, March/April 1991, 17–25.

Loading page 26...

Part One: How to Use the Instructor’s Manual and Other Textbook Ancillaries 21
Study Guide
The only way to learn effectively about money, banking, and financial markets is by continual, and
active, application of the basic concepts developed in the textbook. To help the student in this endeavor,
we provide the Study Guide.
The Study Guide contains the following elements for each chapter:
Chapter Review:
Each chapter begins with a summary of the chapter. The chapter review is divided into sections based on
the section headings provided in the text.
Helpful Hints:
This section provides some additional suggestions and examples to help clarify the more difficult material.
Terms and Definitions:
Students match key terms from the text to their definitions. This section is particularly important because
a working economic and financial vocabulary is necessary in order for the student to advance through the
material.
Problems and Short-Answer Questions:
We provide a number of multi-step problems that require numerical, graphical, or written solutions.
The problems are based on the larger issues developed in the chapter. Smaller issues are addressed with
approximately ten short-answer questions.
Critical Thinking:
This section provides a single multi-step problem that is an application of one of the major issues
developed in the chapter.
Self-Test:
The self-test section provides fifteen true/false and twenty multiple-choice questions to validate areas of
successful learning and to highlight areas needing improvement.
Solutions:
Detailed solutions for all problems and questions are provided at the end of each chapter.

Loading page 27...

Loading page 28...

Loading page 29...

25
Chapter 1
Why Study Money, Banking,
and Financial Markets?
Before embarking on a study of money, banking, and financial markets, the student must be convinced
that this subject is worth studying. Chapter 1 pursues this goal in two ways. First, it shows the student that
money and banking is an exciting field because it focuses on economic phenomena that affect everyday life.
Second, using eight figures, this chapter encourages the student to look at data that bear on the central issues
in this field. An additional purpose of Chapter 1 is to provide an overview for the entire book, previewing
the topics that will be covered in later chapters, and to indicate how the book will be taught.
In teaching this chapter, the most important goal should be to get the student excited about the material.
I have found that talking about the data presented in the figures helps achieve this goal. Furthermore, it
shows the student that the subject matter of money and banking has real-world implications that the
student should care about.
The appendix to this chapter reviews concepts regarding the definitions of aggregate output, income, and
the price level that the student already has seen in an economic principles course. Since these concepts are
extremely important, it might be worthwhile to have your students read this appendix outside of class to
jog their memories.

Loading page 30...

26 Mishkin • The Economics of Money, Banking, and Financial Markets, Tenth Edition
Chapter 2
An Overview of the
Financial System
Chapter 2 is an introductory chapter that contains the background information on the structure and
operation of financial markets that is needed in later chapters of the book. This chapter allows the
instructor to branch out to various choices of later chapters, thus allowing different degrees of
coverage of financial markets and institutions.
The most important point to transmit to the student is that financial markets and financial intermediaries are
crucial to a well-functioning economy because they channel funds from those who do not have a productive
use for them to those who do. Professors who emphasize financial markets and institutions in their course
will want to teach this chapter in detail, and those who focus on international issues will want to spend some
time on the section “Internationalization of Financial Markets.” However, those who slant their course to
monetary theory and policy may want to give this chapter a more cursory treatment. No matter how much
class time is devoted to this chapter, I have found that it is a good reference chapter for students. You might
want to tell them that if in later chapters they do not recall what some financial instrument is or who regulates
whom, they can refer back to this chapter, especially to summary tables, such as Tables 3 and 5.
The chapter introduces Global boxes, which are sprinkled throughout the text, to get students to recognize
the growing importance of the global economy. The Global box in this chapter gets students to think about
how the financial system in the United States is both similar to and different from financial systems in other
countries.

Loading page 31...

30 more pages available. Scroll down to load them.

Preview Mode

100%

Study Now!

XY-Copilot AI

Unlimited Access

Secure Payment

Instant Access

24/7 Support

AI Assistant

Document Details

Subject

Economics

Solution Manual for Economics of Money, Banking and Financial Markets Global Edition, 10th Edition

Study Now!

Document Details

Related Documents

Economics of Money, Banking and Financial Markets, The, Business School Edition, 5th Edition Solution Manual

Microeconomics, 3rd Edition Test Bank

Test Bank for Psychology, 6th Edition

Test Bank for Microeconomics, 21st Edition

Test Bank for Nutrition: An Applied Approach, 5th Edition

Test Bank for Your Interpersonal Communication , 1st Edition

Test Bank for Principles of Macroeconomics, 12th Edition

Test Bank for Microeconomics, 2nd Edition

Test Bank For Campbell Biology, 11th Edition

Solution Manual For Macroeconomics, 16th Edition