1. 1 Econ 353: Money, Banking, and Financial Markets Tian Yu 479 Heady Hall yutian@iastate.edu Lecture 1: Introduction text book chapter 1

2. 2 Syllabus Required textbook Course webpage Homework and exams In-class discussions Grading

3. 3 Main topics Money and Monetary Policy  money, the Fed, money supply, monetary policy Banking and other Financial Institutions  banks: management, evolution and regulation Financial Markets  bond market and interest rate, stock market

4. 4 Motivation 1. Understand the economy 2. Guard the wallet 3. Find a good job 4. Get a decent grade 5. Have an interesting conversation

5. 5 Why study money? ‘Green paper with dead presidents’ head.’ Growth of money supply is related to: Business cycle Price level Interest rate

6. 6 Money and business cycle

7. 7 Money and price

8. 8 Money and interest rate

9. 9 Why study banking? ‘Banks only lend money to those who already have a lot of money.’ An important financial intermediary Get funds from savers to investors Indirect finance alleviate the problem of asymmetric information Banks and money supply

10. 10 Why study financial markets? Channel funds from savers to investors, promoting economic efficiency Affect personal wealth Affect firms’ profit and investment -> employment

11. 11 Stock market

12. 12 Bond market

13. 13 Recap How is money related to business cycle, price level and interest rate? ( look at graphs) Why are banks so important? How do financial markets promote economic efficiency?