Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter 13, Problem 15CQ
(a)
To determine
Identify the effect of an event in M1 and M2 money supply.
(b)
To determine
Identify the effect of an event in M1 and M2 money supply.
(c)
To determine
Identify the effect of an event in M1 and M2 money supply.
(d)
To determine
Identify the effect of an event in M1 and M2 money supply.
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Students have asked these similar questions
Determine whether each of the following is included in both M1 and M2 or M2 only:
a. a Connecticut quarter
b. a savings account at a local savings bank
c. a share draft account at a credit union
d. money market deposit accounts
e. American Express travelers’ checks
Given the following information, what are the values of
M1 and M2?
Small time deposits
$750 billion
Demand deposits and other $420 billion
checkable deposits
Savings deposits
$700 billion
Money market mutual
$1,550 billion
funds
Travelers' checks
$25 billion
Large time deposits
$2,200 billion
Currency
$300 billion
Miscellaneous categories in $60 billion
M2
Suppose large time deposits of $1,200 billion mature
and people decide to deposit $180 billion of this
amount in checking accounts, $800 billion in savings
accounts, and the remaining amount in money market
mutual funds. How do these actions affect M1 and
M2?
Given the following information, what are the values of
M1 and
M2?
Small time deposits
$650 billion
Demand deposits and other checkable deposits
$30 billion
Savings deposits
$750 billion
Money market mutual funds
$600 billion
Travelers' checks
$25 billion
Large time deposits
$600 billion
Currency
$100 billion
Miscellaneous categories in M2
$25 billion
Chapter 13 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- John deposits $1,600 into his checking account. If the reserve ratio is 5%, what are the required and excess reserves? Required reserves: $ Excess reserves: $arrow_forwardIf deposits in the banking system are $540, while the reserve ratio is 0.2 and the currency to deposit ratio is 0.09, then: a) Calculate the total demand for high powered money.arrow_forwardM1 and M2 are two measures of money supply. M1 includes only the most liquid forms of money like currency, checking account deposits, and traveler’s checks. M2 includes all of M1 along with some less liquid forms of money like savings accounts and money market deposits. Suppose you transfer $2,000 from your mutual fund account to your checking account. What is the immediate impact of this transfer on M1 and M2 as per the economy?arrow_forward
- If the required reserve ratio (RRR) in U.S. is 10 percent and you deposit $5,000, which is wired from your parents’ bank account in Germany to your checking account in the U.S. National Bank, then the change in the U.S. money supply eventually should be Group of answer choices a $45,000 increase. a $5,000 increase. no change. a $50,000 increase.arrow_forwardA depositor decides to transfer $3000 from a checking account to a savings account. Create a balance sheet for the bank and show how the balance sheet will be affected due to this change. Only list the changes on your balance sheet. Then explain what will happen to the M1 and M2 money supplies.arrow_forwardThe table below shows the components of M1 and M2 in the U.S. Use the table to calculate Total M2. Round to the third decimal place. Components of M1 and M2 in the U.S. $ trillions Currency $3 Individual market mutual fund balances $0.764 Demand deposits and other checking accounts $3.1 Savings accounts $8.475 Traveler's checks $0.004 Time deposits $0.492arrow_forward
- The First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves? Show your calculations.arrow_forwardIf the desired reserve ratio of a banking system is 10%, and there is a currency drain of 10%, what is the size of its money multiplier? a) zero b) 5.5 c) 6.7 d) 20 e) 10arrow_forwardCurrency held in the vault of a Bank like Wells Fargo is: a) counted as part of both M1 and M2 b) not counted as part of the money supply c) counted as part of M1 but not M2 d) counted as part of M2 but not M1arrow_forward
- 1.4 Suppose you transfer $4,000 from your money market mutual fund account to your checking account. What is the immediate impact of this transfer on M1 and M2? 1.5 Why do banks create money? Do they create money to help the Federal Reserve control the money supply or is there a more basic reason? 1.6 Suppose that the required reserve ratio is 2 percent, and you deposit $100,000 of currency into Chase Bank. What is the potential increase in deposits in the banking system brought about by your deposit? What is the potential change in the money supply?arrow_forwardUse the following table to determine the levels of M1 and M2 in the United States. Money Categories in the United States Asset Amount (billions of dollars) Currency $86 Demand deposits 83 Money market funds 45 Other checkable deposits 39 Savings deposits 472 Small time deposits 24 Traveler's checks 5 Instructions: Enter your answers as a whole number. a. Calculate the M1 money supply. $ billion b. Calculate the M2 money supply. $ billionarrow_forwardQuestion The table below shows the components of M1 and M2 in the U.S. Use the table to calculate Total M1. Round to the nearest third decimal place. Provide your answer below: trillion Components of M1 and M2 in the U.S. Currency Traveler's checks Demand deposits and other checking accounts Savings accounts Time deposits Individual money market mutual fund balances $ trillions $1.2 $0.004 $2.204 $9.805 $0.527 $1.176arrow_forward
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