Hubbard and OBrien provide extensive analysis of the financial events of the past few years. These events are sufficiently important to be incorporated into the body of the text rather than just added as boxed-off features. In particular, they stress the lesson policymakers recently learned the hard way: What happens in the ever-expanding part of the financial system that does not involve commercial banks is of vital importance to the entire economy.



　　This exciting text presents students with the underlying economic explanations of why the financial system is organized as it is and how the financial system is connected to the broader economy. Due to the overwhelming success of their principles of economics textbook, Hubbard and OBrien have employed a similar approach in this textbook: They provide students with a framework that allows them to apply the theory that they learn in the classroom to the practice of the real world.



　　By learning this framework, students will understand not just the 2007—2009 financial crisis and other past events but also developments in the financial system during the years to come. To achieve this goal, they have built four advantages into this text:



　　1. A framework for understanding, evaluating, and predicting

　　2. A modern approach

　　3. Integration of international topics

　　4. A focus on the Federal Reserve

PART I: FOUNDATIONS

Ch 1 Introducing Money and the Financial System

Ch 2 Money and the Payments System

Ch 3 Interest Rates and Rates of Return

Ch 4 Determining Interest Rates



PART II: FINANCIAL MARKETS

Ch 5 The Risk Structure and Term Structure of Interest Rates

Ch 6 The Stock Market, Information, and Financial Market Efficiency

Ch 7 Derivatives and Derivative Markets

Ch 8 The Market for Foreign Exchange



PART III: FINANCIAL INSTITUTIONS

Ch 9 Transactions Costs, Asymmetric Information, and the Structure of the Financial System

Ch10 The Economics of Banking

Ch11 Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

Ch12 Financial Crises and Financial Regulation



PART IV: MONETARY POLICY

Ch13 The Federal Reserve and Central Banking

Ch14 The Federal Reserve’s Balance Sheet and the Money Supply Process

Ch15 Monetary Policy

Ch16 The International Financial System and Monetary Policy



PART V: THE FINANCIAL SYSTEM AND THE MACROECONOMY

Ch17 Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

Ch18 Monetary Theory II: The IS—MP Model