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Mishkin • Instructor’s Manual for The Economics of Money, Banking, and Financial Markets, Twelfth Edition 14
Chapter 1
Why Study Money, Banking, and Financial Markets?
Before embarking on a study of money, banking, and financial markets, the student must be
convinced that this subject is worth studying. Chapter 1 pursues this goal in two ways. First, it
shows the student that money and banking is an exciting field because it focuses on economic
phenomena that affect everyday life. Second, using eight figures, this chapter encourages the
student to look at data that bear on the central issues in this field. An additional purpose of
Chapter 1 is to provide an overview for the entire book, previewing the topics that will be
covered in later chapters, and to indicate how the book will be taught.
In teaching this chapter, the most important goal should be to get the student excited about the
material. I have found that talking about the data presented in the figures helps achieve this goal.
Furthermore, it shows the student that the subject matter of money and banking has real-world
implications that the student should care about.
The appendix to this chapter reviews concepts regarding the definitions of aggregate output,
income, and the price level that the student already has seen in an economic principles course.
Since these concepts are extremely important, it might be worthwhile to have your students read
this appendix outside of class to jog their memories.
