Published Sep 12, 2022
This course offers an overview of the functioning of the financial system both in Canada and abroad. It includes discussions of money and inflation, financial assets, and financial institutions and intermediaries.
Prereq: ECON 101 or ECON 100/COMM 103; ECON 102. Antireq: ECON 304
| Define money and list its functions, compare different definitions of the money supply, and discuss characteristics that determine money's suitability as a medium of exchange. |
| Explain the meaning and behaviour of interest rates, apply present value calculations to a variety of financial decision problems, and interpret the distinction between real and nominal interest rates. |
| Evaluate the importance of financial markets and financial intermediation, describe how financial markets affect the economy, and illustrate the implications of financial intermediation for individual savers/depositors. |
| Summarize the history and functions of central banking, explain the implementation of monetary policy in Canada (and abroad), describe how the central bank, banks and depositors can influence the money supply, and compare the relative advantages and limitations of conventional monetary policy tools. |
Readings Available on LEARN: Lecture slides and other course materials will be posted on LEARN. The course is divided into 5 modules (see Course Schedule below for module dates and topics). For each module, I will post the course materials and assessments on or before the Wednesday of the first week. Students should check LEARN regularly for course materials and announcements.
| Module | Weeks | Dates | Topics | Readings | Assessments |
| 1 | 1 & 2 | Sep 7 -- 20 | Why Study Money, Banking and Financial Markets? | Ch. 1 | Quiz 1 Problem Set 1 |
| An Overview of the Financial System | Ch. 2 | ||||
| 2 | 2 & 3 | Set 21 -- Oct 4 | What is Money? | Ch. 3 | Quiz 2 Problem Set 2 |
| Money as a Medium of Exchange | Supplementary Slides | ||||
| 3 | 5, 6 & 7 | Oct 5 -- Nov 1 (note: Reading Week | The Meaning of Interest Rates | Ch. 4 & Supplementary Slides | Quiz 3 Problem Set 3 |
| The Behaviour of Interest rates | Ch. 5 | ||||
| 4 | 8 & 9 | Nov 2 -- 15 | Banking and the Management of Financial Institutions | Ch. 12 | Quiz 4 Problem Set 4 |
| Liquidity Transformation and Bank Runs | Supplementary Notes/Slides | ||||
| 5 | 10, 11 & 12 | Nov 16 -- Dec 6 | Central Banks and the Bank of Canada | Ch. 14 | Quiz 5 Problem Set 5 |
| The Money Supply Process | Ch. 15 | ||||
| Tools of Monetary Policy | Ch. 16 |
| Title / Name | Notes / Comments | Required |
|---|---|---|
| Mishkin, Frederic S. and Apostolos Serletis (2022). The Economics of Money, Banking, and Financial Markets, 8th Canadian Edition, Pearson. | This is an eText. Instructions on how to register and access the Pearson resources are available on LEARN. | Yes |
| Component | Value |
|---|---|
| Quizzes (five in total, each worth 8%) | 40% |
| Problem Sets (five in total, each worth 12%) | 60% |
Problem Sets: Five short problem sets related to course material will be assigned during the course. Each student must complete the problem sets independently. We will use the dropbox feature on LEARN for submitting solutions to the assigned problem sets. You can submit typed or handwritten solutions, but please (i) submit all your work in one document (PDF or MS Word), (ii) check that the pages are in the correct order and properly oriented, and (iii) ensure that your work is legible, (iv) double-check and re-submit if you do not receive the Email Confirmation Receipt, and (v) keep all your Email Confirmation Receipts until the end of the course as proof of submission. Problem sets are due by 11:59 pm (EST) on the posted due date in the final week of each module. Late submissions will not be accepted – missing a deadline will result in a grade of zero.
Quizzes: Five multiple choice quizzes will draw on material covered in the lectures and assigned readings. The quizzes are to be completed independently. Each quiz will be available via LEARN until 11:59 pm (EST) on the posted due date in the final week of each module. Once you begin the assessment, you will have a pre-specified amount of time to complete it. You only get one attempt to complete each quiz. A grade of zero will be assigned if there is no attempt to complete a quiz before the deadline.
No assignment screening will be used in this course.
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Course materials and the intellectual property contained therein, are used to enhance a student’s educational experience. However, sharing this intellectual property without the intellectual property owner’s permission is a violation of intellectual property rights. For this reason, it is necessary to ask the instructor, TA and/or the University of Waterloo for permission before uploading and sharing the intellectual property of others online (e.g., to an online repository).
Permission from an instructor, TA or the University is also necessary before sharing the intellectual property of others from completed courses with students taking the same/similar courses in subsequent terms/years. In many cases, instructors might be happy to allow distribution of certain materials. However, doing so without expressed permission is considered a violation of intellectual property rights.
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Important notes
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