Introduction to Finance: Markets, Investments, and Financial Management, 15th Edition

CHAPTER 2

Money and the Monetary System

Chapter Learning Objectives . . .

AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO DO THE FOLLOWING:

• Briefly discuss the developments that led to the recent financial crisis.
• Describe the three ways in which money is transferred from savers to businesses.
• Identify the major components of the monetary system.
• Describe the functions of money.
• Give a brief review of the development of money in the United States.
• Describe types of major money market securities.
• Briefly explain the M1 and M2 definitions of the money supply.
• Explain possible relationships between money supply and economic activity.
• Comment on developments in the international monetary system.

Where We Have Been . . .

In Chapter 1, we provided a general overview of the financial environment including the three areas of finance: institutions and markets, investments, and financial management. We hope we provided you with a convincing argument as to why you should study finance and have provided an understanding of the career opportunities available in finance. We described six principles of finance. You should know what is required for a financial system to be effective and know ...