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Money, Banking, and the Financial System, 4th edition

Published by Pearson (January 1, 2021) © 2022

  • Glenn Hubbard Columbia University
  • Anthony Patrick O'Brien Lehigh University

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For economics courses.

Master the modern landscape of money, banking, and the financial system

Money, Banking, and The Financial System gets students excited about the extremely important topics of money, banking, and financial markets. In the past 10 years, virtually every aspect of how money is borrowed and lent, how banks and financial firms operate, and how policymakers regulate the financial system has changed.

The 4th Edition arms students with the most up-to-date coverage of events to grasp these changes and navigate the current monetary and financial system.

Hallmark features of this title

A modern, brief approach

  • Up-to-date, concise content helps students better grasp essential and relevant concepts and theories.
  • An emphasis on lessons policymakers learned the hard way stresses that what happens in the shadow banking system is as important to the economy as what happens in the commercial banking system.
  • Underlying economic explanations detail why the financial system is organized as it is and how the financial system is connected to the broader economy.
  • A framework allows students to apply the theory they learn in class to the real world. This includes understanding, evaluating, and predicting; a modern approach; integration of international topics; and a focus on the Federal Reserve.

New and updated features of this title

Complete economics coverage

  • UPDATED: Coverage of recent developments in policy and theory helps students understand the changes currently going on in the financial system and conduct of monetary policy. This includes the effects of the COVID-19 pandemic and the Fed's policy response to it.
  • NEW: Chapter-Opening Cases provide real-world context for learning and help unify the chapter. New cases examine the corona virus, financial markets, and the flow of funds; why interest rates are so low; and more.
  • NEW: Apply the Concept boxes help students interpret what's happening in the world around them. This includes why the US payments system is so slow, and whether or not the stock market fluctuations during the COVID-19 pandemic disprove the efficient markets hypothesis.

Updated with students in mind

  • NEW: Solved Problems show students how to solve an economic problem by breaking it down step by step.
  • UPDATED: Real-Time Data Exercises help students become familiar with a key data source (FREDâ„¢) and help them to locate and interpret data.
  • NEW: End-of-Chapter Review Questions, Problems and Applications help students apply what they've learned in the chapter, build skills to analyze and interpret information, and apply reasoning and logic to new or unfamiliar situations.

Features of MyLab Economics for the 4th Edition

  • Homework and practice exercises in MyLab are correlated to the exercises in the text, reflecting each author's approach and learning style. They regenerate algorithmically to give students unlimited opportunity for practice and mastery.
  • Every week, microeconomic and macroeconomic news stories and accompanying exercises are posted to MyLab. Assignable and auto-graded, these multi-part exercises ask students to recognize and apply economic concepts to current events.
  • Animated graphs accompany key graphs and figures. They help students grasp concepts such as shifts in curves, movements along curves and changes in equilibrium values.
  • Real-Time Data Analysis Exercises use up-to-the-minute, real-time macroeconomic data from the Federal Reserve Bank of St. Louis's FREDâ„¢ site to test students' knowledge.
  • Digital Interactives are dynamic, engaging assessment activities that promote critical thinking and the application of key economic principles.
  • Learning aids, such as Help Me Solve This, provide extra help for students at the point-of-use.

Features of Pearson eText for the 4th Edition

  • Engage learners with compelling media. Videos and animations bring key concepts to life, helping students place what they are reading into context. These include animated graphs, which use real-time data from FRED.
  • Let students check their understanding. Personalized Study Tools are easy to access on both the web and mobile app to help students learn key terms.

PART 1: FOUNDATIONS
1. Introducing Money and the Financial System
2. Money and the Payments System
3. Interest Rates and Rates of Return
4. Determining Interest Rates

PART 2: FINANCIAL MARKETS
5. The Risk Structure and Term Structure of Interest Rates
6. The Stock Market, Information, and Financial Market Efficiency
7. Derivatives and Derivative Markets
8. The Market for Foreign Exchange

PART 3: FINANCIAL INSTITUTIONS
9. Transactions Costs, Asymmetric Information, and the Structure of the Financial System
10. The Economics of Banking
11. Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions
12. Financial Crises and Financial Regulation

PART 4: MONETARY POLICY
13. The Federal Reserve and Central Banking
14. The Federal Reserve's Balance Sheet and the Money Supply Process
15. Monetary Policy
16. The International Financial System and Monetary Policy

PART 5: THE FINANCIAL SYSTEM AND THE MACROECONOMY
17. Monetary Theory I: The Aggregate Demand and Aggregate Supply Model
18. Monetary Theory II: The IS-MP Model

About our authors

Glenn Hubbard, policymaker, professor, and researcher. Hubbard is Dean emeritus and Russell L. Carson Professor of Finance and Economics in the Graduate School of Business at Columbia University and professor of economics in Columbia’s Faculty of Arts and Sciences. He is also a research associate of the National Bureau of Economic Research and a director of Automatic Data Processing, Black Rock Fixed-Income Funds, and MetLife. He received a PhD in economics from Harvard University in 1983. From 2001 to 2003, he served as chair of the White House Council of Economic Advisers and chair of the OECD Economic Policy Committee, and from 1991 to 1993, he was deputy assistant secretary of the US Treasury Department. He currently serves as co-chair of the nonpartisan Committee on Capital Markets Regulation. Hubbard’s fields of specialization are public economics, financial markets and institutions, corporate finance, macroeconomics, industrial organization, and public policy. He is the author of more than 100 articles in leading journals, including American Economic Review; Brookings Papers on Economic Activity; Journal of Finance; Journal of Financial Economics; Journal of Money, Credit, and Banking; Journal of Political Economy; Journal of Public Economics; Quarterly Journal of Economics; RAND Journal of Economics; and Review of Economics and Statistics. His research has been supported by grants from the National Science Foundation, the National Bureau of Economic Research, and numerous private foundations.

Tony O’Brien, award-winning professor and researcher. O’Brien is a professor of economics at Lehigh University. He received a PhD from the University of California, Berkeley, in 1987. He has taught principles of economics for more than 20 years, in both large sections and small honors classes. He received the Lehigh University Award for Distinguished Teaching. He was formerly the director of the Diamond Center for Economic Education and was named a Dana Foundation Faculty Fellow and Lehigh Class of 1961 Professor of Economics. He has been a visiting professor at the University of California, Santa Barbara, and the Graduate School of Industrial Administration at Carnegie Mellon University. O’Brien’s research has dealt with issues such as the evolution of the US automobile industry, the sources of US economic competitiveness, the development of US trade policy, the causes of the Great Depression, and the causes of black-white income differences. His research has been published in leading journals, including American Economic Review; Quarterly Journal of Economics; Journal of Money, Credit, and Banking; Industrial Relations; Journal of Economic History; and Explorations in Economic History. His research has been supported by grants from government agencies and private foundations.

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