Question
The table below indicates the current values of various money accounts. All figures are denominated in billions of dollars.
Currency=357
Checkable deposits=783
Traveler's checks=8
Small-denomination time deposits=875
Overnight repurchase agreements=120
Savings and Money market deposits=3,144
Money market funds=397
Vault cash=720
Credit card debt=335
Short term Treasury securities=375
The value of M1 $---.
Currency=357
Checkable deposits=783
Traveler's checks=8
Small-denomination time deposits=875
Overnight repurchase agreements=120
Savings and Money market deposits=3,144
Money market funds=397
Vault cash=720
Credit card debt=335
Short term Treasury securities=375
The value of M1 $---.
Answers
The value of M1 is calculated by adding the currency, checkable deposits, and traveler's checks:
M1 = Currency + Checkable deposits + Traveler's checks
M1 = $357 + $783 + $8
M1 = $1,148 billion dollars
M1 = Currency + Checkable deposits + Traveler's checks
M1 = $357 + $783 + $8
M1 = $1,148 billion dollars
b. The value of M2 is $---.
The value of M2 is calculated by adding M1 to small-denomination time deposits, overnight repurchase agreements, savings and money market deposits, and money market funds:
M2 = M1 + Small-denomination time deposits + Overnight repurchase agreements + Savings and Money market deposits + Money market funds
M2 = $1,148 + $875 + $120 + $3,144 + $397
M2 = $5,684 billion dollars
M2 = M1 + Small-denomination time deposits + Overnight repurchase agreements + Savings and Money market deposits + Money market funds
M2 = $1,148 + $875 + $120 + $3,144 + $397
M2 = $5,684 billion dollars
wrong answer.
Apologies for the incorrect answer. Let's recalculate the value of M2.
M2 = M1 + small-denomination time deposits + savings and money market deposits + money market funds
M2 = $1,148 + $875 + $3,144 + $397
M2 = $5,564 billion dollars
M2 = M1 + small-denomination time deposits + savings and money market deposits + money market funds
M2 = $1,148 + $875 + $3,144 + $397
M2 = $5,564 billion dollars
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