NEW YORK CITY COLLEGE OF TECHNOLOGY The City University of New York School of Arts & Sciences Department of Social Science Course Outline

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1 Course code: ECON 201 Course title: Money and Banking Class hours/credits: class hours, credits Prerequisite: ECON 1101 Pathways: not applicable NEW YORK CITY COLLEGE OF TECHNOLOGY The City University of New York School of Arts & Sciences Department of Social Science Course Outline Catalog Description: The importance of money and banking to economic activity on the national and international level. The definition of money and the different financial institutions that help circulate money through the system. Deposit creation, a brief history of the banking system in the U.S. prior to the creation of the Federal Reserve system, and a detailed study of the Federal Reserve banking system. The relationship between money and banking in international trade and finance. Course Description: This course will discuss the importance of money and banking to economic activity on the national and international level. The student will learn the definition of money and about the different financial institutions that help circulate money through the system. The course also covers deposit expansion, the evolution of commercial banking, deposit creation, a brief history of the banking system in the United States prior to the creation of the Federal Reserve system and a detailed study of the Federal Reserve Banking system. The course also includes the relationship between money and banking and Macroeconomic theory and concludes with the importance of money and banking in international trade and finance. RECOMMENDED TEXTBOOK* Economics of Money, Banking, and Financial Markets, Author: Frederic S. Mishkin, Publisher: Prentice Hall, Edition: 10, Year Published: * The textbook used in a particular section will be chosen by the instructor. COURSE INTENDED LEARNING OUTCOMES/ASSESSMENT METHODS LEARNING OUTCOMES 1 To study the structure and evolution of the banking system in the United States To explain the operation of the Federal Reserve Banking system and how it regulates the money supply To develop an understanding of how the banking system ASSESSMENT METHODS* The student should be able to write a paper on the evolution of the banking system. The student will be tested on the different types of financial institutions and how they operate The student should be able to write an essay on the tools used by the Fed to regulate the money supply. The student should be able write an essay on the importance of the Federal Funds target rate and how it effects the economy. Essay question and numerical problems on graded exams

2 works, how banks operate and manage their assets and liabilities and how they deal with credit risk and interest rate risk. To understand how interest rates are measured and explain the distinction between interest rates and returns. To illustrate theories of demand and supply in the bond market, market for money, as well as foreign exchange market. To understand the importance of money and banking in international trade and finance, and study bank s role and involvement in financing of trade, foreign exchange trading and other transactions. To integrate a theoretical understanding with practical problems. Work with real data, such as money supply, inflation, bank balance sheet, exchange rate, balance of payments, and apply theories to real-world problems. 1 consistent with the National Standards outlined by the Council for Economic Education and in homework assignments on basic banking operations, analysis of the bank balance sheet, usage of T-accounts, the calculations and assessment of the ratios for the bank profitability, liquidity, capital adequacy etc. Essay question and numerical problems on graded exams and in homework assignments on how to calculate the present value and yield to maturity for different types of loans and bonds. Essay questions on homework assignment and on graded exams using graphs to analyze the shifts of curves, and explain the results in the bond market as well as in the money market and foreign exchange market. Essay questions on homework assignment and on graded exams. Essay questions on homework assignments where case studies and real data will be used. GENERAL EDUCATION LEARNING OUTCOMES/ASSESSMENT METHODS LEARNING OUTCOMES 1. The student should be able to read and understand financial texts and journals. 2.The student should be able to use the knowledge learned to make intelligent decisions on financial investments.. The student should be able to use the various mathematical formulas used in the banking industry to make rational decisions. 4. The student should have an understanding of how technology has changed the money and banking industry ASSESSMENT METHODS SCOPE OF ASSIGNMENTS and other course requirements* There will be three exams during the course of the semester, including the final. The first two exams will count 20 percent each and the final will count 40 percent. Each instructor has the right to determine their own grading policy, which should be on their syllabi, made available to the students. METHOD OF GRADING elements and weight of factors determining the students grade* Two exams: 40%; Four assignments: total 10%; Presentation and Participation: 10%; Final exam: 40%

3 ACADEMIC INTEGRITY POLICY STATEMENT Students and all others who work with information, ideas, texts, images, music, inventions, and other intellectual property owe their audience and sources accuracy and honesty in using, crediting, and citing sources. As a community of intellectual and professional workers, the College recognizes its responsibility for providing instruction in information literacy and academic integrity, offering models of good practice, and responding vigilantly and appropriately to infractions of academic integrity. Accordingly, academic dishonesty is prohibited in The City University of New York and at New York City College of Technology and is punishable by penalties, including failing grades, suspension, and expulsion. The complete text of the College policy on Academic Integrity may be found in the catalog. COLLEGE POLICY ON ABSENCE/LATENESS A student may be absent without penalty for 10% of the number of scheduled class meetings during the semester as follows: Class Meets Allowable Absence 1 time/week 2 classes 2 times/week classes times/week 4 classes It is the responsibility of the instructor to keep accurate records of every student s attendance and to inform each class orally and in writing of the applicable attendance policy during the first two weeks of class meetings each semester. Excessive Absence If a student s class absences exceed the limit established for a given course or component, the instructor will alert the student that a grade of WU may be assigned. If a student remains officially registered for a course and never attends that course, a final grade of *WN will be assigned. If the student withdraws officially from the course, he/she will be assigned a grade in accordance with the existing withdrawal policy of the College. Appeals A student wishing to appeal the excessive absence status and the impending grade should request a meeting with the chairperson of the department in which the course is offered. The chairperson will consult with the instructor to render a decision. A student wishing to appeal a WU grade may do so through the Committee on Course and Standards. Lateness It is the responsibility of the instructor to keep a record of lateness and to inform each class orally and in writing of the lateness policy during the first two weeks of class meetings of each semester. SAMPLE SEQUENCE OF TOPICS AND TIME ALLOCATIONS (number of hours)* I. Introduction and Overview II. A. Why study money, banking, and financial markets? B. What is money? How the banking system works? An Overview of the Financial System A. Function of Financial Markets B. Structure of Financial Markets C. Financial Market Instruments Hours

4 III. IV. D. Financial Intermediaries What is Money? A. Meaning of Money B. Functions of Money C. Measuring Money D. Money Circulation in the United States Understanding Interest Rates A. Measuring Interest Rates B. Interest Rates and Returns C. Real and Nominal Interest Rates V. The Behavior of Interest Rates, the Risk of Interest Rates A. Determinants of Asset Demand B. Supply and Demand in the Bond Market C. Changes in the Equilibrium Interest Rates D. Supply and Demand in the Money Market E. Default Risk F. Liquidity VI. VII. VIII. IX. Banking and the Management of Financial Institutions A. Bank Balance Sheet B. Basic Banking C. Bank Management Banking Industry A. Historical Development of Banking System B. Financial Innovation and Shadow Banking C. Structure of the US Commercial Banking Industry D. International Banking Central Banks and the Federal Reserve System A. Origins of the Federal Reserve System B. Structure of the Federal Reserve System C. The Fed s Balance Sheet D. Criticism of the Federal Reserve System Tools of Monetary Policy A. Conventional Monetary Policy (Open Market Operations, Discount Policy and the Lender of Last Resort, Reserve Requirements, Interest on Reserves) B. Unconventional Monetary Policy (Asset Purchases, Quantitative Easing in the US) C. Fed Policy Procedures: Historical Perspective X. The Economic Basis of International Trade A. The Relationship between International Trade and Domestic Economic Activity B. Bank s Role and Involvement in Financing of Trade and other Transactions

5 XI. XII. XIII. Foreign Exchange Market A. What are Foreign Exchange Rates? B. Fixed vs. Flexible Exchange Rate Regimes C. Bank s Involvement in Foreign Exchange Trading D. Supply and Demand for Dollar Assets The International Financial System A. Central Bank s Intervention in the Foreign Exchange Market B. Balance of Payments C. The International Monetary Fund and The World Bank Monetary Theory A. The foundations of Macroeconomics B. Quantity Theory of Money C. Keynesian Theories of Money Demand D. Monetarism vs. Keynesianism *guidelines from which instructors may select or adapt Reviewed/Revised by Dr. Unurjargal Nyambuu Date: Fall 201