ECONOMICS 135
Money and Banking
California State University, Sacramento
Fall 2015
Instructor: Ta-Chen Wang
Email: tachen.wang@csus.edu
Classroom: Amador 240
Office: Tahoe 3019
Class Time: TTh 10:30-11:45
Phone: (916) 278-7112
Office Hours: Tuesdays 3:00-4:30
Wednesdays 10:30-12:00
Or by appointment
Prerequisite
Econ 1A (Introduction to Macroeconomic Analysis)
Course Description
Examines the role of financial markets, the banking system, and the Federal Reserve System in the
economy. Included are an introduction to present value and the behavior of interest rates, analysis of
money creation, and evaluation of monetary policy.
Course Objectives
The class will cover the role of financial institutions and their roles in modern economy. The course will
emphasize both the theoretical analysis of economic models as well as the current events. At the end of
the course, you should be able to understand financial news easily and be able to think and evaluate
independently about changes in financial market condition and new government policies.
Textbook and Course Material
Hubbard, R. Glenn and Anthony Patrick O’Brien, Money, Banking, and the Financial System, 2nd edition,
Prentice Hall, 2014.
The textbook is available online at http://www.coursesmart.com/ There are two options:
Hard Copy: ISBN-10 0-13-299491-7, ISBN-13 978-0-13-299491-0
Price: $269
E-text: ISBN-13 9780133021660, ISBN-10 0133021661
Price:$ 110
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Please also notice that previous versions of the book will also work for this class. These include the first
edition of the book and this one:
Hubbard, R. Glenn, Money, the Financial System, and the Economy, 5th and 6th edition, Pearson AddisonWesley, 2007
I will post lecture notes on SacCT. They will come in the form of PowerPoint slides.
Exams and Assignment
There will be three exams and approximately 6 online quizzes. Also, I may add in-class exercises to
reinforce the understanding of the topics covered in lectures. There may also be in-class questions for
discussion.
Exams
The exams are non-cumulative and each will count as 28% of your grade.
Midterms
1st midterm: 10/1 (Thu) in class
2nd midterm: 11/5 (Thu) in class
The midterm exams will last for 75 minutes.
Final
12/17 (Thu) 10:15-12:15
Exam Policies

All exams are closed-book, closed-note.


You are responsible to bring a Scantron form (#882-E) and a simple calculator.
The uses of smartphone, regular cell phones, and note cards are strictly
prohibited.

The instructor reserves the right to change seating arrangements during the
exams.

If you miss an exam due to illness or other necessity, you must contact me prior
to the exam time and provide a legitimate university excuse before you will be
able to make up the work. If you are ill, you need to provide me with a
physician’s note that clearly states that you could not have taken a midterm or
final on the date it was given. Merely being seen by a physician is not sufficient.
Failure to provide a legitimate university excuse will result in a zero on the exam.
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Online Quizzes

There will be approximately 6 online quizzes. I will automatically drop 1 lowest
score (in terms of percentage) of your quizzes. The quizzes are done online on
SacCT and graded automatically. They will count as 16% of your final grade.

No late quizzez are accepted. Due dates for all assignments are posted on SacCT
in advance. It is not possible to extend time for assignments after the due date. If
you add the course late in the semester, you cannot makeup work you have missed.

Give yourself ample time to complete the quizzes. These quizzes are challenging
and important both for your homework grade and your performance in the class. I
encourage you to review class material first before you start the quizzes.

Answer keys for all material will be available online on SacCT after the due date
and time. Please be sure to review your problem sets before exams.
Grading Scale

Each exam accounts for 28% of your final grade, and the homework assignments
(after dropping the lowest score) make up 16% of your grade

The curve looks roughly like this:
87+ A and A74 to 87 B+, B, and B60 to 74 C+, C, and C55 to 60, D+, D, and DBelow 55 F
Please notice that I will adjust the curve according to the relative performance of
the class. However, you will not receive anything above a D if your final score (exams
and homework combined according to the weight above) is less than 60. Also, you will
not pass the class if your final score is less than 55.
Course Policies
1. Due to room capacity, classes are not allowed to go above the cap (40 for this class). I can only
sign add slips if there are spaces open up.
2. All exam dates are set (see above). If you already have obligations that prevent you from taking
any of the exams, you should not take this class. Please schedule your other engagements around
the exam date.
3. Academic honesty is expected. You will receive a mark of zero on any work (including exams)
where cheating occurs. Please make sure you read the University Policy on Academic Honesty:
http://www.csus.edu/admbus/umanual/UMA00150.htm There is also a useful student tutorial on
this issue: http://library.csus.edu/content2.asp?pageID=353
4. Attendance is highly recommended. If you miss a class, be sure to check with your fellow
classmates, and the course web page to see what material you missed.
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5. If you decide to withdraw from this class, please make sure you do so with the registrar. If you
withdraw without permission, you will be assigned a failing grade.
6. I will do my best to respect everyone, and I expect you to do the same to your fellow colleagues.
Please minimize disturbances (such as turning off cell phone ringers.) Also, please do not browse
the Internet, chat online with friends, play video games, or text message in class. These activities
are disruptive to your fellow classmates. If found doing any of the above, you may be asked to
leave the classroom.
7. Classroom discussion is encouraged. However, please make sure to stay on the very topic of the
lecture. If not, I may stop the discussion.
8. If you have a disability and require accommodations, you need to provide disability
documentation to SSWD, Lassen Hall 1008, (916) 278-6955. Please discuss your
accommodation needs with me after class or during my office hours early in the semester.
Course Website
On SacCT. (https://online.csus.edu/) To use the website, you will need your Saclink ID and password.
Course material, including lecture handouts, problem sets, practice exams and solution, and
announcements will be posted on SacCT. Please check the website regularly. In addition, all important
notices will be sent through the SacSend system, so please make sure that your email addresses are up to
date.
Holiday Information
For this class, we will have no classes on the following days:
11/26 (Thanksgiving Day)
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Course Outline (Tentative)
Section 1: Overview of the Monetary System and Financial Markets
Chapter 1 Introducing the Financial System
Chapter 2 Money and Payment System
Quiz 1
Chapter 3 Interest Rate and Rates of Return
Chapter 4 Determining Market Interest Rates
Quiz 2
Chapter 5 Risk Structure and Term Structure of Interest Rates
Midterm 1
Chapter 6 Stock Market, Information and Financial Market Efficiency
Chapter 7 Derivatives and Derivatives Markets
Quiz 3
Section 2: Financial Institutions, Regulations, and Central Bank
Chapter 9 Transactions Costs, Asymmetric Information, and the Structure of the Financial System
Chapter 10 The Economics of Banking
Chapter 11 Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System
Chapter 12 Financial Crises and Financial Regulation
Quiz 4
Midterm 2
Section 3 Money, Monetary Policy, Inflation, and Economic Fluctuations
Chapter 13 The Federal Reserve and Central Banking
Chapter 14 The Federal Reserve’s Balance Sheet and the Money Supply Process
Quiz 5
Chapter 15 Monetary Policy
Quiz 6
Final
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