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: 201 TITLE: Money and Banking CLASS HOURS:, CREDITS: PREREQUISITE: ECON 1101 or ECON 1401 PATHWAYS: Individual and Society 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. RECOMMENDED TEXTBOOK and MATERIALS* 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 To read and understand financial texts and journals. To develop an understanding of the evolution of the financial system; banking system and the U.S. central bank in the U.S. economy; how technology has changed the money and banking industry; evolution of payment system; how first regulatory reform stabilized the industry in the early 20 th century and then deregulation transformed and de-stabilized the industry in the late 20 th century; the goals of recent financial reform legislation. To use the knowledge learned to understand how sound and intelligent decisions on financial investments are made; to understand the role and operation of the Federal Reserve Banking system and the goals of monetary policy with respect to economic conditions; to develop a historical perspective on the evolution of the nation s banking and financial system and monetary policy. ASSESSMENT METHODS* The student should be able to participate in class discussions, give an oral presentation, and prepare a term project paper on a specific topic, issue, or problem involving monetary policy/financial markets. The student should complete short exams and final exam, answering both short answer and problem solving (mathematical solutions) questions. The student will be tested on the different types of financial institutions and how they operate. The student should be able to write a short essay and/or work on a term project and do research on the evolution of the banking system and payment system. The student should be able to write a short essay on the role of the central banking and how it has changed from the early 20 th century to the early 21 st century, the tools used by the Fed to regulate the money supply and on the importance of the Federal Funds target rate and how it effects the economy. Research term project topics could include any of the following: A clear discussion of the regulatory changes that have changed the ways in which commercial banks are structured and organized over time; A detailed explanation of the differences between the investment banking and

2 commercial banking functions of regulated financial institutions; A critical evaluation of a key piece of financial regulatory legislation; A discussion of the challenges that the unregulated shadow banking system poses on efforts to ensure financial stability in the nation s economy. To develop an understanding of how the banking system 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 use the various mathematical formulas used in the banking industry to make rational decisions. 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. The student should answer essay question and numerical problems on graded exams 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. The student should be able to work collaboratively on problem solving in groups and to be able to explain various formulas, what they illustrate and their function in a financial context. 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. The student should answer 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. The student should be able to answer essay questions on graded exams and/or work on a term project and present their research. The student should be able to answer essay questions on homework assignments where case studies and real data will be used. Term project assignment and presentation of the results. GENERAL EDUCATION LEARNING OUTCOMES/ASSESSMENT METHODS LEARNING OUTCOMES 1. KNOWLEDGE: To develop an introductory understanding of the U.S. financial system; meaning and measures of money; regulatory policies; the functions of the Federal Reserve System; the U.S. monetary system; basic banking and bank management; international transactions and exchange rate; the U.S. financial system in the global economy. 2. SKILLS: Develop and apply the tools of economic analysis to be able to critically analyze, and discuss both orally and in writing, the significance of the banking system to the functioning of the market economy; evaluate financial investments; analyze bank s performance; focus on a particular issue in monetary/banking policy and practices; students analyze, evaluate and consider policy options; to be able to articulate and understand the connections ASSESSMENT METHODS* Multiple choice, short answer, and numerical questions on exams; short essay writing for the homework; classroom discussions; a term project and an oral presentation. Short exams and final exam short answer and numerical questions; classroom discussions; short essay and problem solving for the homework; and a term project and an oral presentation.

3 between the health of the modern banking system and the functioning of the larger economy in a global environment.. INTEGRATION: Apply the tools of economic analysis and the economic perspective to the understanding of the goals of monetary and fiscal policy and the domestic and international economic conditions that such policies are structured to address. 4. VALUES, ETHICS, AND RELATIONSHIPS: Develop an understanding of and ability to apply diverse perspectives to the understanding of monetary policy and the banking system; work creatively with others in group projects and problem solving; develop an appreciation of and respect for diverse viewpoints; apply the skills and concepts covered in the course to the analysis of related issues and concepts across other disciplines. * may vary slightly per instructor to suit their own needs Short answer and numerical questions on short exams and final exam and homework; and a term project and an oral presentation. A term project and presentation on a current issue or problem in monetary/banking policy or regulatory policy that will serve to encourage student discussion and sharing of ideas and perspectives. SCOPE OF ASSIGNMENTS and other course requirements* There will be three or four homework assignments covering numerical problem-solving as well as short essay questions during the semester; a term project assignment involving some outside research and preparing a paper (-7 pages) that requires gathering and analyzing of data and related information and an oral presentation; two short exams and final exam. Each instructor has the right to determine their own grading policy, which should be on their syllabus, and made available to the students. METHOD OF GRADING elements and weight of factors determining the students grade* Homework Assignments: 10% Class Participation: 10% Term Project/Presentation: 0% Two short exams: 20% Final exam: 0% *may vary per instructor to suit their own needs NYCCT Policy on attendance and lateness Attendance and class participation are essential and excessive absences may affect the final grade. Courses with laboratory, clinical or field work may have specific attendance policies. NYCCT College Catalog, page 1. Department Policy on attendance and lateness The Social Science Departmental policy with regards to attendance and lateness will be decided by individual instructors and must not violate college and university policy. Departmental resolution approved in March 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

4 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. SAMPLE SEQUENCE OF TOPICS AND TIME ALLOCATIONS (number of hours)* Topics I. Introduction and Overview A. Why study money, banking, and financial markets? B. What is money? How the banking system works? II. An Overview of the Financial System A. Function of Financial Markets B. Structure of Financial Markets C. Type of Financial Market Instruments D. Role of Financial Intermediaries III. What is Money? A. Meaning of Money, History of Money B. Functions of Money C. Measuring Money, Money Supply (M1 and M2) D. Money Circulation in the United States IV. Understanding Interest Rates A. Measuring Interest Rates and Yield To Maturity B. Interest Rates and Returns C. Real and Nominal Interest Rates V. The Behavior of Interest Rates; Bond Market Equilibrium A. Determinants of Asset Demand B. Review on Measuring Risk and Uncertainty C. Supply and Demand in the Bond Market D. Default Risk E. Liquidity VI. Money Market Equilibrium A. Supply and Demand for Money B. Money Market Equilibrium C. Changes in the Equilibrium Interest Rates VII. Banking and the Management of Financial Institutions A. Bank Balance Sheet B. Describing Basic Banking, Sources and Funds of the Bank C. T-account and Changes in Assets and Liabilities of the Bank s Balance Sheet D. Bank Management, Adequacy, Solvency, and Profitability of the Bank VIII. Banking Industry A. Historical Development of the US Banking System B. Separation of Commercial and Investment Banking C. Dual Banking System D. Financial Innovation and Shadow Banking E. Structure of the US Commercial Banking Industry F. International Banking IX. Central Banks and the Federal Reserve System A. Origins of the Federal Reserve System B. Structure of the Federal Reserve System Hours

5 C. The Fed s Balance Sheet D. Criticism of the Federal Reserve System X. 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 XI. 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 XII. Foreign Exchange Market A. What Are Foreign Exchange Rates? B. What Factors Affect the Exchange Rate? C. Fixed vs. Flexible Exchange Rate Regimes D. Bank s Involvement in Foreign Exchange Trading E. Supply and Demand for Dollar Assets XIII. 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 *guidelines from which instructors may select or adapt Reviewed/Revised by Dr. Unurjargal Nyambuu Date: Spring 2018