Financial system is changing at a rapid rate and for a long time. What is particularly relevant about some recent changes is that they have affected the day-to-day lives of the general public to an extent that has no been true in the past. Similarly, the difficulties of the economy and economic policy in recent years have been brought home directly to college students in the form of traditional concern about the job market for college graduates and because of inflationary tuition costs and decreased availability of student loans.
The central concept of finance is the relationship between risk and return. Students appreciate that the high and volatile interest rates that have prevailed in the 1980s mean that financial institutions are operating in an environment of greater risk.
The book has always devoted considerable attention to monetary policy. An active countercyclical monetary policy seems to assign housing and plant and equipment to a low-priority expenditures. This approach is inconsistent with the overall goals of economic policy. Thus we are left with discretionary monetary policy, with the hope that the authorities will pay more attention to the goals than to the game.