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Table of Contents

    • About the Author
    • Acknowledgments
    • Preface
    • 1Introduction to Money, Banking, and Financial Markets
      • 1.1What Are Financial Markets?
      • 1.2Depository Institutions: Commercial Banks and Thrift Institutions
      • 1.3Financial Institution Regulators
      • 1.4Monetary Policy: Why Is Money Important?
      • 1.5Careers in Banking
      • 1.6Chapter Summary and Study Questions
    • 2The Financial System

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      • 2.1Financial Market Functions

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      • 2.2Financial Market Components

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      • 2.3Instruments of the Money Market

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      • 2.4Instruments of the Capital Market

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      • 2.5Financial Intermediary Services

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      • 2.6Financial Intermediary Categories

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      • 2.7Investing in the Stock Market

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      • 2.8Chapter Summary and Study Questions

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    • 3Understanding Money

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      • 3.1The Meaning of Money

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      • 3.2The U.S. Money Supply

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      • 3.3Measuring the Money Supply

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      • 3.4Fiat Money: What Backs the Money Supply?

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      • 3.5Bitcoin and Other Cryptocurrencies

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      • 3.6Chapter Summary and Study Questions

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    • 4Understanding Interest Rates

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      • 4.1What Is Interest?

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      • 4.2Time Value of Money

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      • 4.3Debt Instruments and Interest Rates

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      • 4.4Market Interest Rates, Bond Prices, and Bond Yields

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      • 4.5Interest Rate Applications

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      • 4.6Fighting Inflation Risk with TIPS and I-Bonds

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      • 4.7Chapter Summary and Study Questions

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    • 5Interest Rate Determination

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      • 5.1Constructing an Investment Portfolio

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      • 5.2The Bond Market Model and Interest-Rate Determination

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      • 5.3Bond Market Model Applications

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      • 5.4The Loanable Funds Model and Interest-Rate Determination

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      • 5.5Loanable Funds Market Applications

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      • 5.6Chapter Summary and Study Questions

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    • 6Risk Structure and Term Structure of Interest Rates

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      • 6.1Risk Structure of Interest Rates

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      • 6.2Term Structure of Interest Rates

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      • 6.3Chapter Summary and Study Questions

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      • 6.4Appendix 6.1: What Explains the Slope of a Yield Curve?

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    • 7Credit Cards and Debit Cards: Interest Rates in Action

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      • 7.1What Is a Credit Card?

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      • 7.2Why Are Credit Card Rates So High?

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      • 7.3Debit Cards

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      • 7.4Do You Want a Crypto Credit Card? How About a Crypto Debit Card?

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      • 7.5Chapter Summary and Study Questions

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    • 8Economic Shocks and Economic Stability

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      • 8.1The Business Cycle

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      • 8.2Economic Shock: How an Asset Bubble Can Cause a Recession

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      • 8.3Economic Crisis Examples

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      • 8.4Chapter Summary and Study Questions

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      • 8.5Appendix 8.1: The Aggregate Demand–Aggregate Supply Framework

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    • 9The Business of Commercial Banking

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      • 9.1What Is a Commercial Bank?

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      • 9.2Analyzing the Balance Sheet of a Commercial Bank

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      • 9.3Asset Transformation and Banks

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      • 9.4Fractional Reserve Banking Principle

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      • 9.5Check Processing and Collection

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      • 9.6Managing a Bank’s Operations

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      • 9.7Chapter Summary and Study Questions

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    • 10The Commercial Banking Industry

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      • 10.1A Brief History of Commercial Banking

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      • 10.2Features of the Commercial Banking System

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      • 10.3Bank Mergers

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      • 10.4The Birth and Death of Regulation Q

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      • 10.5Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

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      • 10.6Commercial Banking and Investment Banking

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      • 10.7Government-Sponsored Enterprises

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      • 10.8Shadow Banking

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      • 10.9Foreign Banks in the United States

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      • 10.10Chapter Summary and Study Questions

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      • 10.11Appendix 10.1: Profit Maximization and Consumer Surplus

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    • 11Deposit Insurance

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      • 11.1Events Leading Up to the FDIC’s Creation

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      • 11.2Breaking Down the FDIC

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      • 11.3Bank Examinations: The CAMELS System

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      • 11.4FDIC Insurance Premiums: Risk-Based Premiums

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      • 11.5Resolving Bank Failures: Deposit Payoffs versus Purchase-and-Assumption Transactions

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      • 11.6National Credit Union Administration and Deposit Insurance

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      • 11.7Chapter Summary and Study Questions

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    • 12The Federal Reserve System

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      • 12.1Origins of the Federal Reserve System

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      • 12.2Designing the Federal Reserve System: Checks and Balances

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      • 12.3Structure of the Federal Reserve System

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      • 12.4Meeting Financial Needs of the Public and Governments

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      • 12.5The Federal Reserve’s Dual Mandate, Independence, and Accountability

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      • 12.6Chapter Summary and Study Questions

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    • 13The Monetary Base and Money Creation

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      • 13.1The Federal Reserve Banks’ Consolidated Balance Sheet

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      • 13.2The Rise and Fall of Federal Reserve Float

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      • 13.3The Monetary Base

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      • 13.4How Banks Create Money: The Money Multiplier

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      • 13.5Chapter Summary and Study Questions

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    • 14Monetary Policy

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      • 14.1The Evolution of U.S. Monetary Policy

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      • 14.2Monetary Policy Tools

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      • 14.3The Market for Bank Reserves and the Federal Funds Rate

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      • 14.4Monetary Policy with Limited Reserves: Open Market Operations and the Federal Funds Rate

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      • 14.5Monetary Policy with Ample (Superabundant) Reserves: The Interest-on-Reserve-Balance Rate

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      • 14.6The Federal Reserve’s Stabilization of the Economy: Five Case Studies

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      • 14.7The Margin Requirement and Stock Market Speculation

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      • 14.8Strengths and Weaknesses of Monetary Policy

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      • 14.9Conduct of Monetary Policy: Discretion or Rules

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      • 14.10Chapter Summary and Study Questions

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    • 15Foreign Exchange Market and International Banking

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      • 15.1The Foreign Exchange Market

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      • 15.2Understanding Currency Quotations

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      • 15.3Hedging and the Foreign Exchange Market

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      • 15.4Speculation and the Foreign Exchange Market

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      • 15.5Exchange Rate Determination

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      • 15.6Forecasting Exchange Rates

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      • 15.7International Banking

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      • 15.8Chapter Summary and Study Questions

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    • 16Exchange Rate Systems

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      • 16.1Choosing an Exchange Rate System

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      • 16.2Floating Exchange Rates

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      • 16.3Managed Floating Exchange Rates

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      • 16.4Fixed Exchange Rates

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      • 16.5Exchange Rate Systems: Three Case Studies

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      • 16.6Currency Crisis

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      • 16.7Monetary Policy in an Open Economy

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      • 16.8Chapter Summary and Study Questions

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