University of Embu

Department of Business and Economics

Course code: BFI 327 Academic year: 2021/22

Course Title: MONETARY THEORY AND PRACTICE

COURSE OUTLINE FORM

INSTRUCTOR: Dr. Karambu Kiende Gatimbu, PhD, CPA-K

EMAIL: kiende.gatimbu@embuni.ac.ke

PURPOSE: to introduce the learner to both the monetary and fiscal policies employed by the government
and their economic implication.
Expected learning outcomes
 evaluate the role of money in the economy’
 apply the Keynesian theory of money demand in the economy
 understand the theories of money supply and demand
 understand how monetary policy works

Week/ Date Lecture Topic Remarks

Role of money in the macro-economy

1: Expected
 Money and banking
 Barter system
 Functions and importance of money
 Qualities of good money material
 Value of money
Money supply: simple deposit multiplier, the multi-
2, 3,4&5: Expected
deposit multiplier; Determinants of money supply;
Changes in the monetary base; 

Money demand: theories of money demand - classical

theories, Keynesian theory, the modern quantity theory,
the general equilibrium approach, the monetarist theory,
the new classical theory, the new Keynesian theory.
 Banking system
6&7: Expected
 Commercial banks- functions, advantages
 Central bank of Kenya- functions
 Method of credit control

8: CAT 1 Expected

Monetary policy
9&10: Expected
 Limitations of monetary policy
 Monetary policy objectives
 Instruments of monetary policy
Expansionary and contractionary monetary effects

11: CAT 2 Expected

Money and Inflation

12: Expected
Types, causes, effects of inflation

 Anti- inflationary measures-monetary, fiscal and

non-monetary measures
13: Revision. Expected

14 & 15 Examination

Course Delivery Methodology

A combination of lectures, discussions and Library research
Course Evaluation
Assignments 10%
CATs 20%
Exam 70%
Total 100%
Reference Texts
1. Carl E Walsh (1998) Monetary Theory and Policy, MIT Press
2. Harris L (2004) Monetary Theory McGrawhill
3. Mankiw N.G & Mark P.T(2006) Economics Thomsons Learning UK