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The main objective of this course is to introduce students the basic model of money and monetary economics. Students would understand the theories of monetary transmission and exchange rate determination.
Why Study Money, Banking, and Financial Markets? An Overview of the Financial System. What Is Money? Interest Rates. The Behavior of Interest Rates. The Risk and Term Structure of Interest Rates. The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis. The Money Supply Process. The Tools of Monetary Policy. The Conduct of Monetary Policy: Strategy and Tactics. Quantity Theory, Inflation, and the Demand for Money. Aggregate Demand and Supply Analysis. Monetary Policy Theory. Transmission Mechanisms of Monetary Policy.
Upon succesful completion of this course, a student will be able to
1. Discuss interest rates, its terms structure and the risk.
2. Explain the role of money in the economy and money supply process.
3. Compare and contrast the monetary theories generated throughout the 20th century (mainly Keynesian, Monetarist and their modern incarnations).
4. Discuss the impact of monetary policy decisions in a given country have on international trade and on the policy decisions of foreign economies.
5. Explain monetary policy transmission mechanism in an economy.