ECON 101 or higher. Students who have not passed such a course are not eligible to take this course.
ECON 201 is the preferred prerequisite.

Course Objectives:

This course examines the role of money, the banking system, and the financial system in the economy. It examines how the banking system and related parts of the financial system function, how the banking system creates money, how the Federal Reserve System affects the money supply and interest rates, how money affects the economy, how monetary policy is used to stabilize the economy, and how the financial systems of the various countries of the world are related.

It should be noted that this is NOT a course in bank management.

Examinations:

Three twenty five minute examinations will be given during the semester; each will be worth 100 points. The final examination will be worth 150 points. There will be two Internet assignments requiring students to look up monetary and macroeconomic data on the Internet. These will be part of two of the four examinations, be submitted in class when the exams are taken, and constitute part of the grades for them. Therefore the total number of points that can be earned for the semester is 450.

Students may use simple calculators during the examinations, but programmable calculators, PDAs, etc. will not be allowed. The passing of calculators between students is not permitted.

Basis for Semester Grade:

No letter grades are assigned to individual exams. The semester grade is based on the average score obtained on all examinations, with the final exam counting for one and one half times as much as the other exams.

The TENTATIVE curve is as follows:

A: 85% and up.
B: 70% - 84%
C: 60% - 69%
D: 50% - 59%
E: 49% and lower.

This curve MAY be adjusted downward as the course develops, if needed. However, it will not be adjusted upward.

Attendance Policy:

Four points will be deducted from the score on the next examination for each unexcused absence. There are two free excused absences for the semester. Students with valid reasons for missing additional classes can obtain excuses for the additional absences from the Instructor. In order to obtain such excuses, the student must see the Instructor in person. Excuses will not be granted on the basis of e-mail, voice mail, or other messages.

Missed Exams:

Students must receive permission from the Instructor ahead of time to miss an exam, unless there is a last minute emergency. If such a last minute emergency arises, it is the student's responsibility to contact the Instructor to arrange for a make up.

If a student has not arranged for a make up for an exam by at least 10:00 A.M. of the day that the exam is returned to the class, the student will not be allowed to make up the exam, no matter how valid the excuse. The first time this occurs, the exam is not included in the semester average and the final exam will count for 250 points. If it occurs any additional times, each additional missed exam will count as a zero in the semester average.

Americans with Disabilities Act (ADA):

In compliance with the ADA, all students with a documented disability are entitled to reasonable accommodations and services to support their academic success and safety. Though a request for services may be made at any time, services are best applied when they are requested at or before the start of the semester. To receive accommodations and services the student should immediately contact the Disability Services Coordinator in the Office of Academic and Career Services, 223 Allie Young Hall, 606-783-5188, http://www.moreheadstate.edu/disability/index.aspx?id=31466.

Students should also bring this matter to the attention of the Instructor as soon as possible.

Dishonesty Policy:

If a student is found to have engaged in cheating on any exam (including the final), that exam will count as a zero in the semester average. A second incidence of cheating will automatically result in a failing grade for the course.

Class Conduct:

Students are expected to give the class their undivided attention. Talking in class (except when called on), reading material not related to the class, sending text messages, sleeping in class, wearing earphones, etc, is not permitted.

All cellular telephones, pagers, and iPods are to be turned off before students enter the classroom and to remain off until students have left the classroom. (However, pagers used by emergency personnel for official functions may be left on.)

Except in cases of emergency, student must receive the Instructor's permission ahead of time if they wish to leave the classroom early.

Campus Safety Statement:

Emergency response information will be discussed in class. Students should familiarize themselves with the nearest exit routes in the event evacuation becomes necessary. You should notify your instructor at the beginning of the semester if you have special needs or will require assistance during an emergency evacuation. Students should familiarize themselves with emergency response protocols at

http://www.moreheadstate.edu/emergency.

Old Exams:

Fall 2007 Quizzes

Fall 2007 Final.

Text:

Maureen Burton and Ray Lombra, The Financial System and the Economy: Principles of Money and Banking, 4th. ed.

Web Site for Text:

The Web site for the text is at this link. All material at this site is optional.

NOTE THAT THIS COURSE DOES NOT MAKE USE OF A BLACKBOARD SITE.

NOTE: THIS COURSE OUTLINE IS A WORKING DOCUMENT, WHICH WILL BE SUBJECT TO POSSIBLE REVISION DURING THE SEMESTER AS THE COURSE DEVELOPS.

I. INTRODUCTION

Ch. 1: Introduction and Overview
Internet Reading #1
Ch. 2: Principles of Money
Ch. 4: The Overseer: The Federal Reserve System
Ch. 5: Financial Markets, Instruments, and Market Makers
Ch. 6, pp. 109-116, 129-130: Present Value and Yield
Ch. 3: The Role of Money and Credit
Internet Reading #2
Internet Assignment #1

EXAM #1, TUESDAY, SEPTEMBER 16

II. FINANCIAL MARKETS AND INSTITUTIONS

Internet Reading #3
Internet Reading #4
Ch. 6, pp. 116-126: Interest Rates and Bond Prices
Internet Reading #7
Internet Reading #8
Ch. 12: Financial Innovation
Ch. 13: Financial Instability
Ch. 14: Regulation of the Banking System and the Financial Services Industry
Ch. 7: The Structure of Interest Rates
Internet Reading #10
Internet Reading #11
Internet Reading #12
Internet Reading #13
Ch. 10: Introduction to Financial Institutions and Risk
Internet Reading #14
Ch. 11: The Commercial Banking Industry

EXAM #2, TUESDAY, OCT. 14

Ch. 8: Market Efficiency
Internet Reading #16
Internet Reading #17
Ch. 17: The Debt Markets

IV. INTERNATIONAL FINANCIAL MARKETS

Ch. 9: How Exchange Rates are Determined
Ch. 18, pp. 415 - 428, 438 - 439: Forward and Futures Agreements
Internet Reading #18
Ch. 19: The International Financial System

V . MONETARY THEORY

Internet Reading #19

EXAM #3, TUESDAY, NOV. 11

Ch. 20: The Fed, Depository Institutions, and the Money Supply Process (incl. Appendix 20A)
Internet Reading #20
Ch. 21: The Demand for Real Money Balances and Market Equilibrium
Ch. 23: Aggregate Demand and Aggregate Supply
Internet Reading #21
Ch. 22, pp. 538 - 553: Financial Aspects of Government Behavior

Internet Assignment #2

VI. MONETARY POLICY

Ch. 24: The Challenges of Monetary Policy
Ch. 25: The Process of Monetary Policy Formulation EXTRA CREDIT. 18 EXTRA CREDIT POINTS.
Ch. 26: Policy Implementation
Ch. 27: Monetary Policy in a Globalized Financial System EXTRA CREDIT. 18 EXTRA CREDIT POINTS.

Appendixes to the chapters are only required if they are specifically included in the above list.

Internet reading assignments will be added where appropriate.

Students are responsible for all material in the reading assignments listed in the course outline, whether they are covered in class or not.

INTERNET ADDRESS:

LINKS:

Bureau of Economic Analysis

Bureau of Labor Statistics

Board of Governors of the Federal Reserve System

National Bureau of Economic Research

LECTURE NOTES

Chapter 1

Chapter 2

Chapter 4

Chapter 5

Chapter 6-1

Chapter 3

Chapter 6-2

Chapter 7

Chapter 8

Chapter 9

Chapter 20

Chapter 21

Chapter 23-1

Chapter 23-2