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Econ 353: Money, Banking, and Financial Markets

Lecture 1: Introduction text book chapter 1. Econ 353: Money, Banking, and Financial Markets. Tian Yu 479 Heady Hall yutian@iastate.edu. Syllabus. Required textbook Course webpage Homework and exams In-class discussions Grading. Main topics. Money and Monetary Policy

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Econ 353: Money, Banking, and Financial Markets

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  1. Lecture 1: Introduction text book chapter 1 Econ 353:Money, Banking, and Financial Markets Tian Yu 479 Heady Hall yutian@iastate.edu

  2. Syllabus • Required textbook • Course webpage • Homework and exams • In-class discussions • Grading

  3. Main topics • Money and Monetary Policy • money, the Fed, money supply, monetary policy • Banking and other Financial Institutions • banks: management, evolution and regulation • Financial Markets • bond market and interest rate, stock market

  4. Motivation • Understand the economy • Guard the wallet • Find a good job • Get a decent grade • Have an interesting conversation

  5. Why study money? ‘Green paper with dead presidents’ head.’ Growth of money supply is related to: • Business cycle • Price level • Interest rate

  6. Money and business cycle

  7. Money and price

  8. Money and interest rate

  9. Why study banking? ‘Banks only lend money to those who already have a lot of money.’ • An important financial intermediary • Get funds from savers to investors • Indirect finance alleviate the problem of asymmetric information • Banks and money supply

  10. Why study financial markets? • Channel funds from savers to investors, promoting economic efficiency • Affect personal wealth • Affect firms’ profit and investment -> employment

  11. Stock market

  12. Bond market

  13. Recap • How is money related to business cycle, price level and interest rate? ( look at graphs) • Why are banks so important? • How do financial markets promote economic efficiency?

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