Money, Banking, and the Economy

1 Problems of a Money Economy 1.1 The Functions of Money and Economic Efficiency 1.2 Money and Economic Instability Summary Discussion Questions Important Terms and Concepts Additional Readings2 The United States Money Stock: Changing Definitions 2.1 The U.S. Money Stock—Old and New Definitions 2.2 Which Definition of Money Is Best? Summary Discussion Questions Important Terms and Concepts Additional Readings3 Financial Markets and Financial Institutions 3.1 Types of Financial Markets 3.2 Some Detail on Financial Intermediaries 3.3 Federal and Federally Sponsored Credit Agencies 3.4 Financial Instruments Summary Discussion Questions Important Terms and Concepts Additional Readings4 The Banking Business: Fundamentals 4.1 Commercial Banks as Firms 4.2 Time and Savings Deposits; Borrowing and Bank Capital 4.3 Bank Assets Summary Discussion Questions Important Terms and Concepts Additional Readings5 Bank Operations, Regulation, and Structure 5.1 Running a Bank 5.2 Bank Regulation 5.3 The Structure of the U.S. Banking Industry Summary Discussion Questions Important Terms and Concepts Additional Readings6 The Money Supply Process 6.1 An M-1 Money Supply Model 6.2 Shifts in the Money Multipliers 6.3 Analysis of Monetary Changes, 1960-1978 Summary Discussion Questions Important Terms and Concepts Additional Readings7 Organization and Control of the Federal Reserve System 7.1 Organization of the Federal Reserve System 7.2 Independence of the Federal Reserve System 7.3 The Fed's Dechning Membership 7.4 The Monetary Control Act of 1980 Summary Discussion Questions Important Terms and Concepts Additional Readings8 The Federal Reserve System as a Central Bank 8.1 The Fed's Balance Sheet 8.2 Member Bank Reserve Equation 8.3 The Monetary Base as a Policy Target Summary Discussion Questions Important Terms and Concepts Additional Readings9 The Instruments of Monetary Policy 9.1 Open Market Operations 9.2 The Discount Mechanism 9.3 Reserve Requirements as a Policy Instrument 9.4 Selective Instruments of Monetary Policy 9.5 Moral Suasion Summary Discussion Questions Important Terms and Concepts Additional Readings10 The Strategy of Monetary Policy 10.1 An Outhne of the Strategy Problem 10.2 Past Monetary Policy Strategies 10.3 Recent Strategies of Monetary Policy Summary Discussion Questions Important Terms and Concepts Additional Readings11 Say's Principle and Monetary Equilibrium 11.1 Demand, Supply, and the Concept of Market Equilibrium: A Review 11.2 Say's Principle 11.3 Monetary Equilibrium and Disequilibrium 11.4 Income Equilibrium and Monetary Equilibrium 11.5 Equilibrium Income and Full Employment Summary Discussion Questions Important Terms and Concepts Additional Readings12 Money and the Theory of Money Income 12.1 The Quantity Theory of Money 12.2 The Demand for Money 12.3 A Monetary Theory of Money Income Summary Discussion Questions Important Terms and Concepts Additional Readings13 The Rate of Interest and the Theory of Income 13.1 Say's Principle and the Bond Market 13.2 The Theory of Interest 13.3 A Monetary Theory of Income Summary Appendix: The Term Structure of Interest Rates Discussion Questions Important Terms and Concepts Additional Readings14 The Federal Budget and the Economy 14.1 Methods of Financing Government Spending 14.2 Effects of a Pure Fiscal Policy on Money Income 14.3 Fiscal Policy Financed with Changes in the Money Supply 14.4 Empirical Evidence on Fiscal Policy Summary Discussion Questions Important Terms and Concepts Additional Readings15 Transmission Mechanism of Monetary Influences on Income 15.1 How Monetary Shocks Affect Nominal Income 15.2 The Effects of Monetary Shocks on Output and Prices Summary Discussion Questions Important Terms and Concepts Additional Readings16 Money and Business Cycles: The U.S. Experience 16.1 Monetary and Nonmonetary Theories of the Business Cycle 16.2 Behavior of Money Supply Over the Business Cycle 16.3 Cyclical Changes in the Cambridge k (or the Income Velocity of Money) 16.4 A "Neoclassical" Supply-Side Monetary Model Summary Discussion Questions Important Terms and Concepts Additional Readings17 Inflation: Cause and Effects 17.1 The Problem and Its Causes 17.2 Some Myths of Inflation 17.3 Effects of Inflation on Households and Business 17.4 Inflationary Redistributions of Wealth and Income 17.5 Effects of Inflation on Resource Allocation Summary Discussion Questions Important Terms and Concepts Additional Readings18 Inflation and Unemployment: The Stagflation Problem 18.1 The Natural Unemployment Rate Hypothesis 18.2 Expectations-Augmented Phillips Curves and the Accelerationist Hypothesis Summary Discussion Questions Important Terms and Concepts Additional Readings19 Money, the Balance of Payments, and Exchange Rates 19.1 Money and the Balance of Payments Under Fixed Exchange Rates 19.2 Flexible Exchange Rates and the Purchasing Power Parity Theory 19.3 World Inflation Summary Discussion Questions Important Terms and Concepts Additional Readings20 New Views on Stabilization Policies 20.1 Brief Review of Empirical Evidence on Policy Activism 20.2 The Credibility Effect, the German Hyperinflation, and the Fed 20.3 Incomes Policies 20.4 Can Democracy Tame Inflation? Summary Discussion Questions Important Terms and Concepts Additional ReadingsGlossaryIndex