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Money and Banking

Rutgers University
Economics Department
Money and Banking, Fall 2015

Course title: Money and Banking (50:220, 301:90, Index number 13136 (ONLINE COURSE)    
Prerequisites:  Principles of Macroeconomics and Microeconomics 
Day Time Place: ONLINE
Instructor: Robert Vaden                                                       

Phone: 856-582-9325
Email: robert.vaden@rutgers.edu  

Catalog Description: Theories of money and their applications; structure and historical development of U.S. monetary and banking institutions; current problems of money management.    

Course Overview: The course will cover the evolving role of the Federal Reserve, the structure and performance of the nation’s financial system and the role of money and interest rates in today’s economy. Issues related to the definition and measurement of the nation’s money supply will be discussed as will be the importance of an efficient and sound financial system. Special emphasis will be placed on the more recent performance of the nation’s financial system in the period leading up to the “Great” recession and in the subsequent slow recovery.

Special emphasis will be placed on monetary policy as a tool to manage the economy. In this context, we will extensively cover many issues related to the Federal Reserve and the Congressional mandate which defines the responsibilities of the Federal Reserve. We will also discuss the key economic and political challenges currently facing the institution.         

Required Text: The Economics of Money, Banking & Financial Markets by Frederic Mishkin. Pearson, Tenth Edition.

Recommended Reading: The student should supplement the text with readings from the Wall Street Journal and the Economists (a British weekly) as time permits. The Federal Reserve’s minutes from the meetings of the Federal Open Market Committee (FOMC) are also informative. Links to key websites of the Federal Reserve will be provided.         

 Federal Reserve Bank of Philadelphia: The Federal Reserve Bank of Philadelphia has an exhibition called “Money in Motion”. The exhibition is interactive and has much information that is useful in a Money and banking Course. The exhibition is free, open to the public, and highly recommended. 

Course Objectives:

  • Introduce the student to the role of money, the financial system, interest rates, and the central bank in a modern economy.
  • Improve the student’s knowledge of the American financial system and its evolution, its recent performance, and the challenges it faces.
  • Give the student a good understanding of the causes and impact of the recent recession and the role of the financial system in both the downturn and the subsequent recovery.
  • Make the student aware of the role of the Federal Reserve Board, its organization structure, its economic and political challenges, the tools of monetary policy and its performance over the last several years.
  • Make the student aware of key official economic data sources on variables such as the money supply, inflation, consumer and mortgage debt outstanding, etc.                                 

Grades:  There will be a mid-term and a final exam. In addition, there will be roughly 10 unannounced class exercises that will take the form of multiple choice questions, definitions, or brief essay or discussion questions.  The average of the class exercises will be calculated and these exercises, collectively, will count as one exam.

Note that, as the semester progresses, any test or exercise questions may be taken from any material covered to date.  In other words, all exercises and exams are cumulative.

Your class grade will be calculated as the average of the mid-term exam, the final exam, and the class exercises.

Final grades will be assigned as follows: 90+=A; 84-89=B+; 78-83=B; 72-77=C+; 66-71=C; 60-65=D; 59 or less= F;

Office Hours: To be determined. Students are strongly encouraged to use the office hours as a way to meet the instructor and get clarification and help with problem areas in the course. Office hours are one way to work around the lack of personal contact inherent in an online course. 

Course Outline

The topics to be covered are listed below. Topics are subject to change as the semester progresses.  

Week starting



Week 1

Week of Sept 1


Knowledge Assessment Exercise

An introduction to Money and Banking 

Why Study Money, Banking, and the Financial System

Appendix to chapter 1



Mishkin, chapter 1



Mishkin. Chapter 1

Weeks 2 and 3

Weeks of

Sept. 7 and Sept. 14 

Overview of the Financial System


Major financial Legislation in the United States

Mishkin  chapter 2


Mishkin, chapter 11

Pages 258 and 259

Week 4

Week of Sept. 21

What is Money

Mishkin, chapter 3

Week 5

Week of Sept, 28

Interest rates

Understanding interest Rates

Term and Risk Structure of Interest rates


Mishkin, chapter 4, pages 66-70, 81-84

Mishkin, chapter pages 118-122, 126-128

Week 6

Week of Oct. 5

An Economic Analysis of Financial Structure 

Mishkin, Chapter 8, pages 165-180

Week 7

Week of

Oct. 12

Financial Crisis

The Great Recession

Mishkin, Chapter 9


Week 8

Week of Oct. 19



Week 9  

Week of Oct. 26

Financial Crisis, continued

Financial Crisis Inquiry Report 


Website will be provided

Week 10

Week of Nov. 2

Banking and the Management of Financial Institutions

Banking Industry: Structure and Competition

Mishkin, chapter 10,pages 213-220

Mishkin, chapter 12

Week 11  


Week of Nov. 9

The Shadow Banking System


Central Banking and the Conduct of Monetary Policy 

Financial Crisis Inquiry Report, Chapter 2

Mishkin, chapter 13

Week 12   


Week of

Nov. 16 

The Money Supply Process


Press Release: Federal Open Market Committee

Mishkin, chapter 14



Week 13


Week of

Nov. 23


Goals of Monetary Policy


Unemployment and Inflation


Thanksgiving Week

Miskin, chapter 15



Week 14

Week of November 30

Tools of Monetary Policy                  

Mishkin,  chapter 16

Week 15


Week of December 7

Wall Street Reform and Consumer Protection Act of 2010




Week 16

Final Exam  Date to be Determined