Includes bibliographical references and index.

Part I: The Basics Chapter 1. Introducing Money, Banking, and Financial Markets An Overview Why Study Money, Banking, and Financial Markets? Careers in Banking and Financial Markets Chapter 2. The Role of Money in the Macro economy Introducing Money Money, the Economy, and Inflation Chapter 3. Financial Instruments, Markets, and InstitutionsFlow of FundsFinancial Instruments and MarketsFinancial Intermediaries: Purposes and ProfilePart II: Financial Instruments and MarketsChapter 4. Interest Rate Measurement and BehaviorCalculating Interest RatesWhat Determines the Level of Interest Rates? Chapter 5. The Term and Risk Structure of Interest Rates The Term Structure of Rates and the Yield Curve Risk and Tax Structure of Rates Appendix: Bond Price Volatility: Duration Versus Maturity Chapter 6. The Structure and Performance of Securities MarketsNature and Function of Securities MarketsEfficiency of Secondary Market TradingEfficient Capital Markets and RegulationChapter 7. The Pricing of Risky Financial AssetsEconomic UncertaintyPrinciples of DiversificationThe Risk Premium on Risky SecuritiesChapter 8. Money and Capital MarketsThe Government Bond MarketBank-Related Securities: CDs and EurodollarsCorporate SecuritiesMunicipal SecuritiesMortgage SecuritiesThe Stock MarketChapter 9. Demystifying DerivativesAn Overview of Financial FuturesAn Overview of Options ContractsAn Overview of SwapsChapter 10. Understanding Foreign Exchange What Determines Foreign Exchange Rates? Fixed Versus Floating Exchange Rates Part III: Banks and Other Intermediaries Chapter 11. The Nature of Financial Intermediation The Economics of Financial Intermediation The Evolution of Financial Intermediaries in the United StatesFinancial Intermediaries: Assets, Liabilities, and ManagementChapter 12. Depository Financial InstitutionsThe Fundamentals of Bank ManagementMajor Trends in Bank ManagementNonbank Depository Institutions-The ThriftsChapter 13. Nondepository Financial InstitutionsInsurance Companies and Pension FundsMutual FundsFinance CompaniesSecurities Brokers and Dealers and Investment BanksVenture Capital Funds, Mezzanine Debt Funds, and Hedge FundsBanks Versus Nondepository Institutions Part IV: Financial System Architecture Chapter 14. Understanding Financial Contracts How Business Obtains Financing The Economics of Financial Contracting Chapter 15. The Regulation of Markets and Institutions The Regulation of Financial Markets in the United States The Regulation of Commercial Banks in the United States Regulation of Nondepository Financial IntermediariesWhere Securities Market and Banking Regulation Meet: The Glass-Steagall Act, A Collapsing BarrierChapter 16. Financial System DesignInformation and Financial System DesignFinancial System Design: A Descriptive Summary of Germany, Japan, the United Kingdom, and the United StatesFinancial System Design and Conflict Resolution: Germany, Japan, the United Kingdom, and the United StatesFinancial System Design for Eastern Europe and Other Emerging Economies Part V: The Art of Central Banking Chapter 17. Who's in Charge Here? Formal Structure of the Federal Reserve System The Realities of Power The Problem of Federal Reserve Indepen dence Chapter 18. Bank Reserves and the Money Supply Check Clearing and Collection Deposit Expansion: The Single BankDeposit Expansion: The Banking System Deposit Contraction Appendix: The Complete Money Supply Process Chapter 19. The Instruments of Central Banking Reserve Requirements Discounting and the Discount Rate Open Market OperationsChapter 20. Understanding Movements in Bank ReservesThe Fed's Balance SheetThe U.S. Treasury's Monetary AccountsThe Bank Reserve EquationPutting It All to UseAppendix: Monetary Effects of Treasury Financing Chapter 21. Monetary Policy StrategyThe FOMC DirectiveThe Fed's StrategyThe Taylor Rule and the Fed's Track RecordPart VI: Monetary TheoryChapter 22. The Classical FoundationsClassical EconomicsAggregate Demand and Supply: A SummaryReal Versus Nominal Rates of InterestModern Modifications: Monetarists and New ClassicistsAppendix: GDP Definitions and Relationships Chapter 23. The Keynesian Framework When Saving Doesn't Equal Investment Consumption and Simple GDP DeterminationGovernment to the RescueMoney and the Rate of InterestMonetary Policy Aggregate Demand and SupplyChapter 24. The ISLM WorldThe LM CurveThe IS CurveThe Simultaneous Determination of Income and Interest: IS and LM TogetherMonetary and Fiscal PolicyISLM and Aggregate DemandAppendix: The Simple Algebra of Income DeterminationChapter 25. Money and Economic Stability in the ISLM WorldMonetary Policy, Fiscal Policy, and Crowing OutIs the Private Sector Inherently Stable?Flexible Prices, the Natural Rate of Interest, and Real Crowding OutAppendix: Interest Rates Versus the Money Supply Under UncertaintyChapter 26. An Aggregate Supply and Demand Perspective on Money and Economic StabilityIs the Private Sector Inherently Stable?Monetary Policy, Fiscal Policy, and Crowding OutInflation, Money, and the Phillips CurveInflation and Interest RatesShould a Robot Replace the Federal Reserve?Chapter 27. Rational Expectations: Theory and Policy ImplicationsWhen Are Expectations Rational?Anticipated Versus Unanticipated Monetary PolicyImplications for Stabilization PolicyInflation, the Phillips Curve, and CredibilityInterest Rates and Anticipated Monetary PolicyChapter 28. Empirical Evidence on the Effectiveness of Monetary PolicyLiving with VelocityThe Impact of Monetary Policy on GDPPart VII: Grand FinaleChapter 29. Tying It All TogetherThe Economic IndicatorsValuation, the Fed, and Market ReactionPutting It All TogetherGlossaryIndex