SOLUTION,, MANUAL
Money,,Banking,,Financial,Markets,&,Institutions
2nd,Edition,for,Brandl,Michael,,All,Chapters,1,-,24
,TABLE,OF,CONTENTS
Part,I:,MONEY,AND,ITS,PRICES.
1. Introduction,and,Overview.
2. Money,,Money,Supply,and,Interest.
3. Bonds,,Loanable,Funds,&,Interest,Rates.,,4.,I
nterest,Rates,in,More,Detail.
Part,II:,MONEY,AND,OVERALL,ECONOMY.
5. Financial,Markets,through,Time.
6. Aggregate,Supply,&,Aggregate,Demand.,,7.,
Banks,and,Money.
Part,III:,CENTRAL,BANKS.
8. Central,Banks.
9. Monetary,Policy,Tools.
10. The,Money,Supply,Process.,,11
.,Monetary,Policy,&,Debates., Part,I
V:,THE,BANKING,SYSTEM.
12. Bank,Management.
13. Bank,Risk,Management,&,Performance.,,14.,
Banking,Regulation.
Part,V:,FINANCIAL,MARKETS.
15.,Money,Markets.,,16.,
Bond,Markets.
17.,Stock,Market,&,Efficiency.,,18.,M
ortgage,Market.
Part,VI:,GLOBAL,FINANCIAL,MARKETS.,,19.,F
X.
20. Global,Financial,Architecture., Part,V
II:,FINANCIAL,INSTITUTIONS.
21. Thrifts,and,Finance,Companies.,,22.
,Insurance,and,Pensions.
23. Mutual,Funds.
24. Investment,Banks,and,Private,Equity.
, CHAPTER,2:,Money,,Money,Supply,,and,Interest
2-1 Section,Review
What,is,the,difference,between,money,and,currency?,When,are,they,the,same?,
1.
Why,might,they, bedifferent?
ANS:,Money,is,anything,generally,accepted,in,exchange,for,goods,&,services.,Cur
rency,is,issued,by, a,bank,or,the,government,,but,currency,is,not,necessarily,money.,
They,are,the,same,when,they,are, accepted,in,exchange,for,goods,and,services.,Cu
rrencies,can,stop,being,money,if,people,don’t, acceptthem,in,exchange,for,goods,
and,services.,If,a,group,of,people,stop,using,currency,to,get, goods,and,services,bu
t,instead,use,bananas,,then,the,bananas,are,the,money.
2.How,many,prices,must,a,barter,economy,have,if,the,economy,has,four,goods
?,What,if,it,has, 400goods?,Explain,why,having,a,money,in,the,second,case,is,b
eneficial.
ANS:,4,goods,=,6,prices;,400,goods,=,79,800,prices.,Money,allows,us,to,specializ
e,and,reduce,our, searchcost., Money,allows,us,to,reduce,the,number,of,stated,pric
es,we,need.
3. You,read,a,news,story,about,a,country,that,is,suffering,from,rapid,,ongoing,incre
ases,in,the,cost, ofliving.,Which,characteristic,of,money,is,being,directly,negatively,
impacted,in,that,economy?
a. Unit,of,account
b. Medium,of,exchange
c. Store,of,value
d. Double,coincidenc
e,of, wantsANS:,C
2-2 Section,Review
1. Bobby,is,confused.,He,states:,“Since,prisoners,are,not,allowed,to,smoke,in,prisons,a
ny,longer,, Radford’s,,examples,,of, cigarettes, in, POW, camps, no, longer, applies.”,
How, would, you, explain, to, Bobby,how,,Radford’s, story,,demonstrates,,the,,concep
ts,,of,, the,,criteria,,of,,money,,,as,,well, as,,the, importance,ofchanges,in,the,money,sup
ply?
, ANS:,Any,asset,that,is,able,to,be,standardized,,divisible,,durable,and,in,demand,cou
ld,be,currency,,as, long, as, it, is, a, medium, of, exchange,, is, a, unit, of, account, and, has
, store, of, value., Cigarettes, were, money.
Money,,Banking,,Financial,Markets,&,Institutions
2nd,Edition,for,Brandl,Michael,,All,Chapters,1,-,24
,TABLE,OF,CONTENTS
Part,I:,MONEY,AND,ITS,PRICES.
1. Introduction,and,Overview.
2. Money,,Money,Supply,and,Interest.
3. Bonds,,Loanable,Funds,&,Interest,Rates.,,4.,I
nterest,Rates,in,More,Detail.
Part,II:,MONEY,AND,OVERALL,ECONOMY.
5. Financial,Markets,through,Time.
6. Aggregate,Supply,&,Aggregate,Demand.,,7.,
Banks,and,Money.
Part,III:,CENTRAL,BANKS.
8. Central,Banks.
9. Monetary,Policy,Tools.
10. The,Money,Supply,Process.,,11
.,Monetary,Policy,&,Debates., Part,I
V:,THE,BANKING,SYSTEM.
12. Bank,Management.
13. Bank,Risk,Management,&,Performance.,,14.,
Banking,Regulation.
Part,V:,FINANCIAL,MARKETS.
15.,Money,Markets.,,16.,
Bond,Markets.
17.,Stock,Market,&,Efficiency.,,18.,M
ortgage,Market.
Part,VI:,GLOBAL,FINANCIAL,MARKETS.,,19.,F
X.
20. Global,Financial,Architecture., Part,V
II:,FINANCIAL,INSTITUTIONS.
21. Thrifts,and,Finance,Companies.,,22.
,Insurance,and,Pensions.
23. Mutual,Funds.
24. Investment,Banks,and,Private,Equity.
, CHAPTER,2:,Money,,Money,Supply,,and,Interest
2-1 Section,Review
What,is,the,difference,between,money,and,currency?,When,are,they,the,same?,
1.
Why,might,they, bedifferent?
ANS:,Money,is,anything,generally,accepted,in,exchange,for,goods,&,services.,Cur
rency,is,issued,by, a,bank,or,the,government,,but,currency,is,not,necessarily,money.,
They,are,the,same,when,they,are, accepted,in,exchange,for,goods,and,services.,Cu
rrencies,can,stop,being,money,if,people,don’t, acceptthem,in,exchange,for,goods,
and,services.,If,a,group,of,people,stop,using,currency,to,get, goods,and,services,bu
t,instead,use,bananas,,then,the,bananas,are,the,money.
2.How,many,prices,must,a,barter,economy,have,if,the,economy,has,four,goods
?,What,if,it,has, 400goods?,Explain,why,having,a,money,in,the,second,case,is,b
eneficial.
ANS:,4,goods,=,6,prices;,400,goods,=,79,800,prices.,Money,allows,us,to,specializ
e,and,reduce,our, searchcost., Money,allows,us,to,reduce,the,number,of,stated,pric
es,we,need.
3. You,read,a,news,story,about,a,country,that,is,suffering,from,rapid,,ongoing,incre
ases,in,the,cost, ofliving.,Which,characteristic,of,money,is,being,directly,negatively,
impacted,in,that,economy?
a. Unit,of,account
b. Medium,of,exchange
c. Store,of,value
d. Double,coincidenc
e,of, wantsANS:,C
2-2 Section,Review
1. Bobby,is,confused.,He,states:,“Since,prisoners,are,not,allowed,to,smoke,in,prisons,a
ny,longer,, Radford’s,,examples,,of, cigarettes, in, POW, camps, no, longer, applies.”,
How, would, you, explain, to, Bobby,how,,Radford’s, story,,demonstrates,,the,,concep
ts,,of,, the,,criteria,,of,,money,,,as,,well, as,,the, importance,ofchanges,in,the,money,sup
ply?
, ANS:,Any,asset,that,is,able,to,be,standardized,,divisible,,durable,and,in,demand,cou
ld,be,currency,,as, long, as, it, is, a, medium, of, exchange,, is, a, unit, of, account, and, has
, store, of, value., Cigarettes, were, money.
