The objective of this course is to enable students to understand the fundamental concepts of monetary theory, the functions of money within the economic system, the factors affecting the supply and demand for money, theories of interest rates, exchange rates, and monetary policy practices; and to equip them with the knowledge and skills to analyze the relationships between inflation, monetary policy, and financial markets, and to evaluate current economic developments within the framework of basic monetary theory.

This course covers the definition of money, its historical development, types, and functions; monetary standards; money supply and demand; the money creation process by central banks; bank money; the money multiplier; the quantity theory of money; the liquidity preference approach; interest rate theories; exchange rates; the balance of trade; convertibility, monetary policy instruments, and the macroeconomic effects of monetary policies. Furthermore, the causes and consequences of inflation, as well as current monetary policy practices, are evaluated through case studies, with the aim of developing students’ ability to interpret economic developments and relate them to the financial system.