Faculty of Business and Economics

Department of Economics

ECW3143Economics of Money and BankingUnit Outline

Semester 2, 2013

Contact details for Chief Examiner: Eduard Bomhoffeduard.bomhoff@monash.edu

Contact details for Campus Coordinator at BerwickRatbek DzumashevEmail: ratbek.dzhumashev@monash.edu Contact details for Campus at Berwick: 100 Clyde Road, Berwick, VIC 3806 P: PO Box 1071,Narre Warren, VIC 3805, Tel: +61 3 9904 7100

Contact details for Campus Coordinator at Gippsland: Ernesto ValenzuelaEmail: ernesto.valenzuela@monash.edu Contact details for Campus at Gippsland:

Northways Road, Churchill, Victoria 3842, Tel: +61 3 9902 6648

Contact details for Campus Coordinator in South Africa:xxx

212019/1

Prepared by:Eduard BomhoffRatbek DzhumashevMonash University

Produced and Published by:Faculty of Business and EconomicsMonash UniversityChurchill, Victoria, Australia, 3842

Printed by:Off-Camus Learning Centre Print GroupPhone (03) 5122 6268Monash UniversityChurchill, Victoria, Australia, 3842

Revised June 2013

© Copyright 2010NOT FOR RESALE. Copyright © Monash University 2010. All rightsreserved. Except as provided in the Copyright Act 1968, this work may not be reproduced in any form without the written permission of Faculty of Business and Economics, Monash University.

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Contents

Unit Introduction...........................................1

Unit synopsis...............................................1Unit objectives.............................................1Time commitment.............................................1

Teaching and Learning Approach...............................2

Tutorial allocation.........................................2

Resources and Requirements...................................3

Unit requirements...........................................3Prescribed text.............................................3Study guide text............................................3Q Manual....................................................3Guide to layout and footnoting..............................4Student feedback and support services.......................4

Lecture Program..............................................7

Tutorial program...........................................11

Assessment..................................................12

Assessment summary.........................................12Criteria for assessment....................................12Marks and grades.........................................1313Assessment details.........................................13Submission instructions....................................14Final examination..........................................15Return of final marks for the unit.........................16Special consideration......................................16

Policy on Assessment........................................17

Plagiarism, cheating and collusion.........................17Plagiarism register........................................18Non-discriminatory language................................19Students with disabilities.................................19

Related links..............................................19Using the University's computer and IT facilities..........19

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Unit Introduction

Unit synopsis

This unit is designed to analyse the effect of money on key economicvariables such as interest rates, inflation, output, and on theworkings of the banking sector. In addition, the unit examines theroles played by Commercial Banks and the Central Bank in the processof money creation and the implementation of monetary policy. Theunit uses an economic approach to allow analysis of policydecisions.

Unit objectives

The learning goals associated with this unit are to:

The learning goals associated with this unit are to:

1. develop a knowledge of the theoretical structure of an openeconomy with particular emphasis on monetary policy formulationand implementation

2. develop skills in analysis and prediction for the key economicvariables when the economy is faced with internal and externalmarket shocks

3. be able to use an economic model that allows for competitiveinternational capital markets and floating exchange rates toanalyse policy measures.

Time commitment

This unit is worth six (6) credit points. This is equivalent to 10-12 hours work per week consistently over the semester. The totaltime commitment expected for this unit is 156 hours. For on-campusstudents this includes 39 hours of class contact plus an additional117 hours during the semester in study for this unit. This includestime spent in preparing for and completing assessment tasks,together with time spent in general study, revision, and examinationpreparation.

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Teaching and Learning Approach

This unit is offered in on-campus mode.

The MUSO site contains an electronic copy of the Unit Guide whichprovides detailed weekly study materials – weekly reading, learningobjectives, PowerPoint slides- under the WEEK1-12 tabs on the homepage. The site also includes links to useful external sites, thelibrary and the Q Manual. There is also an online discussion forumfor students.

The essential reading for this unit is the relevant chapters of theprescribed textbook. It is important that you have access to and usethe textbook. Additional readings may be posted during the semesterin order to provide you with topical materials from the financialpress.

After studying this unit, you should be able to:

1. Develop understanding of monetary theory at the intermediatelevel, including the term structure of interest rates, thedetermination of exchange rates and the relations betweeninterest rates and exchange rates.

2. Develop knowledge of the monetary aspects of the open economywith particular emphasis on monetary policy formulation andimplementation.

3. Develop skills in analysis and prediction for the direction ofchange in key economic variables when the economy is faced withinternal and external market shocks.

4. Be able to classify different types of financial and economiccrises and to analyze how fragility in the banking system cancause crises.

5. Discuss policy measures to address a financial and economiccrisis, both in developed and in developing economies.

6. Become an informed “consumer” of financial and economic newsabout countries or about the global economy.

In on-campus mode, this unit will be taught as a two-hour classsession and a one hour tutorial each week for 12 weeks.

Tutorial allocation

On-campus students in Australia must enrol themselves in a tutorial group using Allocate Plus: go to http://allocate.cc.monash.edu.au/

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Resources and Requirements

Unit requirements

Before undertaking ECW3143, students must have satisfactorilycompleted ECW1101 Introductory Microeconomics, ECW1102 IntroductoryMacroeconomics and ECW2730 Macroeconomic Policy.

Prescribed text

Frederic S. Mishkin (2013). The Economics of Money, Banking andFinancial Markets, 10th Edition (Global Edition) with MyEconlab.Pearson

Recommended text(s)/readings

Australian students may like to look at the Reserve Bank of AustraliaBulletin. The Bulletin is available from the RBA website:http://www.rba.gov.au .

The Central Banks of Malaysia and South Africa are accessible athttp://www.bnm.gov.my and http://www.reservebank.co.za.

Monash subscribes to the websites of the International Monetary Fundwww.imf.org and the World Bank www.worldbank.org. The website ofthe Bank for International Settlements http://www.bis.org is freelyaccessible.

http://faculty.chicagobooth.edu/luigi.zingales/papers/research/My_Losing_Battle_Leviathan.pdf is an excellent collection of briefarticles on the 2007-8 financial crisis in the rich West. Thefollowing pieces accessible from this site are recommended readingfor the research question in the final exam:

“Purchasing toxic assets is no easy solution” (30-31)“A trust deficit is driving our economy down” (36)“We are not all Keynesians” (39-40)“To regulate finance, try the market” (43-44)“Capitalism after the crisis” (56-61)“How to make a bank raise equity?” (71-72)“A better plan for Greece” (87-88)

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Q Manual

The Q Manual is a student guide for producing quality written work on time. Printed copies are available at the bookshop or online at URL: http://www.buseco.monash.edu.au/publications/qmanual/qmanual.pdf

Guide to layout and footnoting

The comments which follow are a guide to the conventions which areto be applied in writing essays and assignments. Failure to followthese instructions may result in lost marks:

1. Assignments/essays should be typed. Typed assignments/essaysshould be double spaced.

2. Assignments should be printed ‘double-sided’ where possible.

3. When typing papers, a margin of thirty millimetres should bereserved on both the left and right hand sides of the page. Forhandwritten papers, a substantial margin should be provided onthe left hand side of the page. This provides adequate room forexaminers’ comments as well as creating an unclutteredpresentation.

4. All quotations should be enclosed within double inverted commas.Quotations of two or more sentences, which run to four or morelines, should be single spaced and indented from the main body ofthe text. The source of the quotation must be notedappropriately. Refer to the Q Manual.

5. Grammar, punctuation and spelling are matters which should not beneglected. Failure to take care in these matters causes confusionand ambiguity.

6. A reference list is required notwithstanding your use ofreferencing. You should use the APA style of referencing as setout in the Q Manual.

The general rule for the use of a reference list is that allreferences used are cited in alphabetical order. Do not includematerial which is quoted in one of the references unless thequoted source was actually consulted by you.

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Student feedback and support services

Feedback to students

Students will receive feedback in the following ways:

individual feedback on assignments; class discussions of strengths and weaknesses of assessed work; problem solving in tutorials, etc.

Students will be provided with opportunities to answer questions inlectures and tutorials – obtaining feedback on the understanding ofkey points.

Students will have set readings which are discussed in tutorialsenabling them to gain feedback on their own perceptions, as well astheir tutor’s and peers, and to promote discussion and commonunderstandings.

Students may also be provided with model answers or feedback ontheir general performance on common tasks.

Students may also be regularly provided with verbal feedback onimportant issues to be noted from teaching and learning materials.

Students should also be provided with an explanation of the gradesto mark their assignments.

Feedback from students

At Monash University formal feedback from students is sought in avariety of surveys, including online / hardcopy Unit Evaluations andMonQueST surveys.

Unit Evaluation surveys enable students to provide feedback onfeatures of units (including content, workload, referencematerial and overall satisfaction), with a view to obtainingconsistent and quality information.

MonQueST enables students to provide feedback on specificaspects of an individual’s teaching. The feedback is given tothe lecturers so that they can make improvements to theirteaching methods.

For further details see URL:http://www.adm.monash.edu.au/cheq/evaluations/

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Online / Paper Unit Evaluations (administered between Weeks 9 and13): http://www.adm.monash.edu.au/cheq/evaluations/unit-evaluations/distribution-administration.html

Monash Experience Questionnaire. The MEQ will be administered inalternate years with the next administration in 2009:http://www.adm.monash.edu.au/cheq/evaluations/other-surveys/meq/index.html

Student support

Students are able to access academic support provided by CALT(Centre for the Advancement of Learning and Teaching). All studentsare welcome to attend classes, workshops and drop-in centres run byCALT Learning Support staff. Currently, individual consultations areavailable for intensive work on approaches to study or Englishlanguage skills for the following students:

Referred by Academic Progress Committee hearing.

Received an early warning letter.

Failed an assignment or unit and have a signed referral form from lecturer, tutor, or other support service personnel.

Referred by lecturer, tutor, or other support service personneland have a signed referral form.

Attended a 15 minute drop-in session, or seen a CALT Learning Support staff member and identified as needing intensive support.

Further information about student support services, including adviceon Student Rights Assistance, is available at: http://www.adm.monash.edu.au/community-services/

Learning skills unit

The Monash University Library provides services and resources toMonash students who want to improve their academic learning skills,including the quality of their academic English and approaches tostudy, at the undergraduate and postgraduate levels. Assistance isoffered in such areas as oral communication and presentation,reading, study and exam preparation, effective listening and note-taking in lectures and seminars, analysis, problem-solving andcritical thinking, and academic essay, report and thesis writing.

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Drop-in sessions, classes and workshops are scheduled throughout thesemester. You can come to a library drop-in session for a brief 10to 15 minute consultation with a learning skills adviser about yourassignment or academic skills. A longer appointment may be scheduledfor a later date if deemed necessary by the Learning Skills Adviser.If you are in need of a consultation for more intensive support, youcan ask your lecturer, the Disability Liaison Officer or acounsellor from Health Wellbeing and Development to sign theLearning Skills Unit referral form, found at:http://www.lib.monash.edu/contacts/learning-skills.htmlSimply contact your local Learning Skills Adviser to schedule aconsultation once you have a completed referral form.

Further information on learning skills services at Gippsland can be found at: http://www.monash.edu.au/lls/classes/gippsland.html

Online language and learning resources are also available at Language and Learning Online: http://www.monash.edu.au/lls/llonline These include tutorials, interactive exercises, downloadable examples and other resources covering:

essay, report and thesis writing reading and note taking grammar listening to lectures oral presentation other study skills.

Online learning support resources are also available for higher degree research students, and students with a disability. To access the full range of online resources visit: www.monash.edu.au/lls

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Lecture Program

WEEK TOPIC REQUIRED READING

1 Introduction, inflation Mishkin: Ch 1-32 Interest rates Mishkin: Ch 4,53 Term structure Mishkin: Ch 6 4 Efficient markets, financial institutions Mishkin: Ch 7, 85 Banking industry Mishkin: Ch 116 Regulation of banks Mishkin: Ch 127 Central banking Mishkin: Ch 14,158 Monetary policy Mishkin: Ch 16,179 Transmission Mechanism Mishkin: Ch 2610 Exchange rate policy Mishkin: Ch 1911 Financial and banking crises Mishkin: Ch 9,10

12 Financial and banking crises (continued) - World wide experience Mishkin: Ch 10

Here are the learning objectives for each week:

Week 1At the end of this week you should be able to:

discuss the importance of financial markets and institutions describe the nature and functions of the financial markets and

instruments discuss the functions of money and the way the money supply is

measured understand the costs of inflation.

Comment:The main objective for this week is to refresh your memory about themain concepts in macroeconomics. They are in the appendix to chapter1. You should then study the graphs in chapter 1 in order to get afeel for the dynamics of some important variables. We add somediscussion about the costs of inflation – a topic which is notcovered much in the textbook.

Week 2At the end of this week you should be able to:

discuss movements in interest rates describe the relation between interest rates and the business

cycle describe the bond market and pricing of bonds

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Comment:The main objective for this week is to analyze interest rates. Inchapters 4 and 5 we do not yet distinguish between short and longrates as we will in chapter 6. You should appreciate the reasons whyinterest rates go up and down and be able to interpret movements ininterest rates. You should also become familiar with the bond marketand pricing of bonds.

Week 3At the end of this week you should be able to:

evaluate why the slope of the term structure changes evaluate simple calculations using the expectations theory of

the term structure discuss the effects of the central bank on the term structure

Comment:The main objective for this week is to analyze the so-called termstructure of interest rates. You should come to understand how theshape of the yield curve has forecasting power for economic growthand why that is so. You should learn how the central bank caninfluence short rates and thus the slope of the term structure.

Week 4At the end of this week you should be able to:

evaluate the use of information in financial markets describe the simple valuation of stocks discuss the simple dynamics of stocks, bonds and short rates

over the business cycle evaluate the position of banks in the financial system discuss the importance of asymmetric information and adverse

selection

Comment:The main objective for this week is to analyze the use ofinformation in financial markets. Also, you should become familiarwith the simple valuation models in the text and with the dynamicsof stocks and bonds over the business cycle and long-term.

The second main objective for this week is to make a start with theanalysis of banks in the financial system and the macroeconomy.Youshould develop an understanding of the importance of asymmetricalinformation in the financial sector, especially its consequences inthe forms of adverse selection and moral hazard.

Week 5At the end of this week you should be able to:

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discuss how banks generate profits and what risks they mayincur

appreciate how banks differ from other business

Comment:The objective of this week is to look more closely at the bankingsector. Most macroeconomic analysis focuses on the markets forgoods, labour and money, but banks and their activities in thecredit market are crucial to understand booms and busts in the realeconomy. Banks are more fragile than other businesses because ofleverage and because of the nature of their liabilities.

Week 6At the end of this week you should be able to:

discuss the importance of asymmetric information and adverse selection for banks and their customers

why banks need a lot of regulation the ongoing struggles between banks and their regulators evaluate how the AD-AS model neglects the credit market and

banks and how that limits its usefulness Comment:You should develop an understanding of the importance ofasymmetrical information in the financial sector, especially itsconsequences in the forms of adverse selection and moral hazard.Important also is to see why banks need regulation and to appreciatethe tensions between the banks and their regulators as well as thedilemmas faced by the regulators.

Week 7At the end of this week you should be able to:

discuss the main activity of central banks evaluate the issue of central bank independence describe the connections between the central bank and the

commercial banks

Comment:The main objective for this week is to analyze central banks and howmonetary policy is described by looking at the changes in thebalance sheet or considering changes in short interest rates. Youshould revise and extend your knowledge of the links between thebalance sheet of the central bank and the amount of money in theeconomy.

Week 8At the end of this week you should be able to:

evaluate different channels of monetary policy10

describe monetary policy for a single country analyze open market operations and discuss alternative

techniques of monetary policy understand the difficulties and dilemmas of monetary policy apply Taylor’s rule and understand its relevance for gauging

monetary policy

Comment:The main objective for this week is to analyze monetary policy inthe context of a single country. You should understand open marketoperations and other ways in which the central bank can influencethe macro economy. You should also revise the Taylor rule as well assome of the dilemmas in central banking.

Week 9At the end of this week you should be able to:

evaluate different channels of monetary policy understand why some channels depend on the exchange rate regime

Comment:The main objective for this week is to analyze the so-calledtransmission mechanisms of monetary policy. You should become veryfamiliar with the scheme on p. 665 of the textbook and understandthe different mechanisms as explained in the text

Week 10At the end of this week you should be able to:

describe currency interventions (sterilized and non-sterilized) understand different exchange rate arrangements evaluate inflation targeting and compare it to the alternatives describe a currency board as a case of fixed exchange rates

Comment:The main objective for this week is to analyze the ways in which thecentral bank can either protect a fixed exchange rate or steer amanaged floating exchange rate. You should be able to appreciate whysome countries opt for a fixed exchange rate, but others prefer a(managed) float. You should also learn to appreciate the costs andrisks of inflation targeting as compared to fixed exchange rates.

Week 11 At the end of this week you should be able to:

evaluate how the AD-AS model neglects the credit market and banks and how that limits its usefulness

evaluate the current financial crisis and its aftermath11

compare the current crisis to the 1997-8 East Asian crisis discuss differences between a recession caused by an anti-

inflationary policy and a banking and financial crisis

Comment:The main objective for this week is to analyze the behaviour ofbanks in the most recent crisis, and develop an understanding of themacroeconomic consequences. You should learn how boom-busts in assetmarkets can damage the macro economy and the banking system. You should also learn how the recent crisis differs from the EastAsian crisis in 1997-8 and how both these episodes are differentfrom an ordinary recession caused by an anti-inflation policy of thecentral bank.

Week 12At the end of this week you should be able to:

evaluate the current outlook for monetary policy and banking policy worldwide

discuss a few policy measures to reduce the frequency and severity of financial crises

evaluate the shortcomings of traditional monetary macroeconomics in evaluating financial crises

Comment:The main objective for this week is to continue to discuss therecent and earlier crises in financial systems and in the macroeconomy. You should also develop an informed view on some policymeasures that have been proposed to reduce the frequency andseverity of future financial and economic crises.

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Tutorial program

The tutors in Malaysia, Australia and South Africa may not cover allthe questions indicated below. They will also add their own emphasisto the tutorials WEEK TOPIC / ACTIVITY QUESTIONS

1 NO TUTORIALS

2 Discussions of the problem solutions. Feedback to students.

1:2, 6. 2:1, 3, 8, 10,14,15,16. 3: 8, 9, 12

3 Discussions of the problem solutions. Feedback to students. 4:3, 4, 7, 14. 5:11, 17, 19

4 Discussions of the problem solutions. Feedback to students. 6:5, 16, 17, 23, 24

5 Discussions of the problem solutions. Feedback to students. 7: 7, 10, 13, 17, 22. 8: 22, 25

6 Discussions of the problem solutions. Feedback to students. 11: 2, 3, 7, 8, 9, 16.

7 Discussions of the problem solutions. Feedback to students. 12: 1, 10, 12, 15, 17

8 Discussions of the problem solutions. Feedback to students.

14: 11, 13, 14, 15. 15: 11, 13, 15

9 Discussions of the problem solutions. Feedback to students. 16: 2, 17. 17:10, 14, 21, 23

10 Discussions of the problem solutions. Feedback to students.

26: 1, 2, 3, 4, 9, 11 8: 16, 19,20

11 Discussions of the problem solutions. Feedback to students. 19: 5, 6, 22, 23

12 Discussions of the problem solutions. Feedback to students. 9: 1-5, 7-9, 10, 11. 10: 1-6, 10

Students should note that the lecture and tutorial programs outlinedabove are a guide to the material to be covered in this unit and not

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a definitive statement of when that material will be covered.Specific details relating to the timing will be discussed inlectures and tutorials.

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Assessment

Assessment summary

The unit assessment is as follows:

Within-semester assessment 30%Examination 70%

Grades in the unit are as follows:

HD 80 – 100%D 70 – 79%C 60 – 69%P 50 – 59%N 0 – 49%

Note: The Monash Grading Scale Policy is located at: http://www.policy.monash.edu/policy-bank/academic/education/assessment/grading-scale-policy.html

Criteria for assessment

The following points represent guidelines to assist you incompletion of the assignments. Please make every effort to present the assignments in typewrittenform. This will enhance your work and make it easier for examinersto read and assess.

Attempt to fully utilise your acquired knowledge in answering eachassignment. Also, clearly acknowledge your sources of information inan appropriate manner.

The assignments will be judged on the basis of:

the depth of your understanding of the topic and the issuesinvolved;

your ability to determine the requirements of the question andpresent the material in a clear, logical and well-structuredformat;

use of appropriate theoretical framework; inclusion of accurately drawn and labelled diagrams (where

applicable) which are fully incorporated into the discussion; proper use of referencing and inclusion of a reference list or

bibliography; and quality of presentation – involving correct spelling, grammar,

good writing style and neat professional presentation isexpected.

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Marks and grades

Hurdle requirements

Your final mark will be the sum of the marks gained in all pieces ofassessment. To pass this unit you must achieve at least 50% overall.

Assessment moderation

Where a written piece of work submitted for assessment is given aFail grade or High Distinction by an examiner, that piece of workwill be marked again by a second examiner who will independentlyevaluate the work, and consult with the first marker. No studentwill be awarded a Fail grade for an assessment task or unit withoutan independent examiner confirming the result.

Final marks and grades

Faculty policy states that ‘the final mark that a student receivesfor a unit will be determined by the Board of Examiners on therecommendation of the Chief Examiner taking into account all aspectsof assessment’.

Assessment detailsASSESSMENT TASK DUE DATE WEIGHTING

Assignment 1 (based on week 1-3 material.)

Wednesday 4th September 2013

15%

Multiple choice test (based on week 1-7 material)

Week beginning 23rd September 2013 (week 9 ofthe University Calendar)

15%

Final Examination Official Examination 70%

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(based on the whole unit)

Period

Total 100%

There is a hurdle rate of 50% on the final exam. You must obtain 50%on the final exam to pass the unit.

Assignment 1: This assessment is designed to test your achievementsfor Weeks 1 to 3. This is an individual assignment that will focuson short interest rates. No group work is permitted for thisassignment. The assignment should not exceed 1500 words. A shortertext is fine. The submission date is Wednesday 4th September by5:00pm.

Assignment question:

Please go to the website of the Bank for InternationalSettlements www.bis.org , open Chapter 6 in the most recentAnnual Report and then look at graphs 6.1, 6.5 and 6.6. Graph6.5 shows market expectations as of late May 2013 for thefuture path of the “policy rate” in the US. That refers to thefederal funds rate, the shortest rate in the market.

For this assignment also look at the chapters on monetarypolicy in earlier Annual Reports, especially those for 2005 and2008. Chapter 4 in the BIS Annual Report for 2005 hasinformation about earlier episodes of rapid increases in thisUS interest rate.

Apply Taylor’s rule to your analysis of the federal funds ratein the US. For the output gap, take 1.5 times the differencebetween the actual unemployment rate and a natural rate ofunemployment for the US of 5.5% (that makes for a currentoutput gap of some 3 per cent). That number then needs to bemultiplied by 0.5 according to the formula for the Taylor rule(repeated from ECW2730 on p. 458 of your textbook).

Useful references arehttp://blogs.wsj.com/economics/2009/10/14/qa-john-taylor-on-his-rule-and-feds-balance-sheet/ and John Taylor’s blog, forexample http://economicsone.com/2013/07/16/cross-checking-checking-in-on-the-taylor-rule/

Task:

Write a short essay about the recent history of the federal fundsrate, its value as you write and its possible future. Use Taylor’srule and include your answers to the following questions:

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1. Interest rates cannot be less than zero. Does Taylor’s rulesuggest that the best value for the federal funds rate wouldhave been negative in recent years?

2. Is today’s federal funds rate too low, too high or abut rightin view of Taylor’s rule?

3. Construct two scenario’s for US inflation and US unemployment,one optimistic and one pessimistic. Calculate the federalfunds rate with Taylor’s rule according to your scenarios. Nowevaluate the market forecasts in figure 6.5 in the BIS reportin the light of your scenarios.

4. Do you see shortcomings or limitations of Taylor’s rule on thebasis of your analysis?

Faculty style guide

Work submitted for this assessment must follow the Faculty Style as outlined in the Faculty Q Manual. Copies of this Manual can be obtained at the bookshop or online at:http://www.buseco.monash.edu.au/publications/qmanual/

Submission instructions

Due dates for assignments are deadlines not guidelines and thepolicy is applied as follows:

1. All on-campus assignments should be submitted by the due date.

2. Requests for extensions of time will only be considered ifsuch requests are made prior to the due date.

3. A penalty may be imposed for late submission.

Experience has shown us that people who do not submit their work ontime almost invariably fail to complete all the required work in theunit. It is in your own best interest to submit your work on time.

Applications for extension of time

All applications for an extension of the time allocated to anassessment task must be made in writing to the Unit Leader from yourcampus. Approval, if granted, will be in writing and will berecorded on the Faculty Assignment cover sheet accompanying theassessment task by the responsible lecturer/tutor.

Penalties for late lodgement

A maximum penalty of 10% of the mark allocated to this assessmenttask may be deducted for each day that the assessment is late ifprior approval of an extension is not sought.

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Submission mode

Your assignment should be submitted in a manner which is appropriateto your mode of study.

Assignments submitted in PLASTIC COVERS or inserted into PLASTICPOCKETS cannot be processed by the system used at the university.Assignments submitted in such a manner will be reduced to the properform for processing and marking, but plastic covers and pockets willnot be returned.

FAXED ASSIGNMENTS ARE NOT ACCEPTABLE IN THIS UNIT; ONLY ORIGINALCOPIES WILL BE ASSESSED. This decision is based upon considerableexperience with endeavouring to mark diagrams which are unreadablewhen received in a faxed assignment. The student is inevitablydisadvantaged by the illegibility.

Electronic submission is not acceptable in this unit without priorarrangement with the Unit Coordinator. Where individual approval isgiven, assignments which are lodged electronically must be sentfrom: Your.Name@student.monash.edu.au email address and must includean electronic copy of the Assignment cover sheet. Electroniclodgement from any other email addresses will not be accepted.

There is no provision for submitting assignments via MUSO in thisunit.

Assignment cover sheets

Work submitted for assessment must be accompanied by a completedcopy of the assignment cover sheet which has been signed by thestudent. NO assignment will be accepted or marked if it is notaccompanied by a signed assignment cover sheet.

Return of marked assignments

All assignments should be returned within four weeks. On-campusstudents will have their assignments returned either in lectures ortutorials. Assignments may not be picked up on behalf of otherstudents.

Multiple choice test: This will be conducted in Week 9 of Semester 2, 2013.

The multiple choice test will contain 40 questions worth one markeach. The test duration is one hour. This is an open book test.

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Questions will test students’ understanding of materials discussedin weeks 1-7.

If you are unable to attend the mid-semester test during the timescheduled for your class you must notify your lecturer and apply forwithin-semester special consideration. (See information at the endof this Unit Outline under the heading ‘Special Consideration’ formore details.)

Final examinationMarks available

The examination is worth 70% of your final grade.

Examination date and location

This examination will be held during the official examinationperiod. The examination timetable which provides full details of theexamination schedule can be accessed through the My.Monash portal.

Examination duration

This will be a three [3] hour examination.

Materials that are examinable

The exam will cover materials from the complete unit.

Instructions to students

The examination is a closed book examination. Calculators are notneeded and not allowed. We will post sample exam questions at thebeginning of the semester.

The exam has one compulsory research question, worth 20 marks/70.This year the question for you to research and answer is:

“National and international policy makers should try to reduce thefrequency of banking and financial crises. Argue for three differentpolicy measures that would be helpful to reduce the frequency ofbanking and financial crises. In each case indicate whether themeasure you propose requires international coordination or could beimplemented in individual countries even if other countries declinedto implement the same measure.”

The exam has a further two compulsory questions, one on centralbanking and one on financial crises, each worth 10 marks/70.

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Finally, there are three pairs of two questions: two on interestrates, two on policy issues related to exchange rates and financialcrises and two on monetary policy. From each pair, choose onequestion only and answer that question (10 marks/70 per questionanswered).

Thus: the exam has 9 questions; please answer the three compulsoryquestions 1-3 including the research question 1 and answer either 4or 5, either 6 or 7 and either 8 or 9.

Return of final marks for the unit

The final mark for this unit will be released by the Board ofExaminers on the date nominated in the Faculty Calendar. Studentresults will be accessible through the My.Monash portal.

Special consideration

Within the semester assessment

A student whose work during a teaching period, and attendance,performance in a semester test, class presentation or assignment hasbeen affected by illness or other serious cause may apply forspecial consideration.

For more information on eligibility and how to apply, please referto the following webpage:http://www.monash.edu.au/exams/special-consideration.html

Special consideration for examinations

A student whose work during a teaching period or whose performancein an examination or other assessment has been affected by illnessor other serious cause may apply for special consideration.

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Policy on AssessmentAssessment for the unit as a whole is in accordance with theprovisions of the:

University’s Assessment of Coursework Policy, located at: http://www.policy.monash.edu/policy-bank/academic/education/assessment/assessment-of-coursework-policy.html

University’s Assessment of Coursework Procedures, located at: http://www.policy.monash.edu/policy-bank/academic/education/assessment/assessment-of-coursework-procedures.html

Faculty of Business & Economics Assessment Policy at: http://www.buseco.monash.edu.au/esg/agu/policies/assess-def.htmlhttp://www.buseco.monash.edu.au/esg/agu/policies/methods-of-assess.html

Plagiarism, cheating and collusion

University statements on plagiarism, cheating and collusion are contained in the University Discipline Statute 4.1: http://www.monash.edu.au/pubs/calendar/statutes/statutes04.html#Heading102

The University’s Plagiarism Policy is located at: http://www.policy.monash.edu/policy-bank/academic/education/conduct/plagiarism-policy.html

The University’s Plagiarism Procedures are located at: http://www.policy.monash.edu/policy-bank/academic/education/conduct/plagiarism-procedures.html

The University is actively committed to preventing plagiarism,cheating and collusion for the protection of the university’sreputation and standards for current and future students. Severepenalties may be imposed on students who engage in, or who supportother students engaged in, activities which seek to undermine theintegrity of the unit assessment process.

If you exchange or sell your assignments, exam responses, or anymaterials used for your assessment the University may takedisciplinary action against you for involvement in plagiarism,cheating or collusion.

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Plagiarism – means to take and use another person’s ideas and/ormanner of expressing them and to pass them off as your own byfailing to give appropriate acknowledgement.

Cheating – means seeking to obtain an unfair advantage in anexamination or in other written or practical work required to besubmitted or completed by a student for assessment.

Collusion – is the presentation of work which is the result in wholeor in part of unauthorised collaboration with another person orpersons.

If the failure to acknowledge the ideas of others was notintentional, the matter will be reported to the Chief Examiner andacademic penalties applied. Intentional plagiarism is regarded ascheating and is therefore a serious offence and will be dealt withunder the University’s Discipline Statute 4.1. If cheating is foundto have occurred, one of the following penalties will be imposed; areprimand, disallowance of the work, failure of the unit,suspension, or exclusion from the University.

The University will consider that plagiarism has occurred in any ofthe following circumstances:

when phrases and passages are used verbatim without quotationmarks and without a reference to the author

when an author's work is paraphrased and presented without areference

when other students' work is copied or partly copied when items for assessment are written in conjunction with other

students (without explicit direction by the relevant staffmember)

when a piece of work has already been submitted or assessed. when other people’s designs, codes or images are presented as

the student’s own work when laboratory results of someone else are used without

appropriate attribution when lecture notes are reproduced without due acknowledgement

Plagiarism register

The university maintains a simple and confidential register torecord warnings to students about unintentional and intentionalplagiarism. The register is accessible to staff nominated by theDeans and the Deputy Vice-Chancellor (Education) and, whererequested, students concerned have access to their own details in

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the register. The register will include a record of a student’sinvolvement in alleged plagiarism, whether any formal action wastaken or penalties applied, and if penalties where applied, thenature of those penalties. Academic staff will have access to thisinformation when considering any subsequent allegations ofplagiarism. For further information please refer to the University’s PlagiarismProcedures:http://www.policy.monash.edu/policy-bank/academic/education/conduct/plagiarism-procedures.html

Monash Language and Learning Online and the Monash UniversityLibrary (Online Tutorials) offer services to help students avoidplagiarism.

Non-discriminatory language

The Monash Policy on Global Equal Opportunity at:http://www.adm.monash.edu.au/sss/equity-diversity/equal-opportunity/policies/globaleopol.html, dotpoint 6, covers non-discriminatory language:

Students with disabilities

Students with disabilities should contact the Disability Liaison Office:

Website: http://adm.monash.edu/sss/equity-diversity/disability-liaison/index.html

Telephone: +61 3 9905 5704 Drop In: Equity and Diversity Centre, Level 1 Gallery Building

(Building 55), Monash University, Clayton Campus. Related links

Students are encouraged to refer to the web-based Student Information Index http://www.monash.edu.au/pubs/sii/ for further information about their study needs at Monash University.

Using the University’s computer and IT facilities

You are responsible for the security of your computer account(authcate username and password) as provided and authorised by theUniversity. The University’s Acceptable Use of InformationTechnology Facilities by Students Policy sets out the termsgoverning use of your account, including:

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using the IT facilities in an ethical and lawful way, inaccordance with Australian laws or relevant local laws (where astudent is based in another country);

co-operating with other users of the IT facilities to ensurefair and equitable access to the facilities;

protecting the security of your account, by NOT sharingpasswords and by always logging off after using a Universitycomputer.

The University reserves the right to access and monitor email,websites, server logs and electronic files and any computer orelectronic device connected to the Monash University network,including personally owned equipment, to investigate suspected orreported breaches of the Acceptable Use policy, or breach of anystatutes, regulations or policies of the University, or suspectedbreaches of the law.

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