3. Use the figures in the table below to answer the following questions. Billions Small time deposits Money-market mutual funds held by businesses Savings deposits, including money- market deposit accounts Money-market mutual funds held by individuals Checkable deposits Currency $1250 1300 1620 905 836 325 (a) What is the value of M1? $ billion (b) What is the value of M2? $ billion

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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**3. Use the figures in the table below to answer the following questions.**

|                                                  | Billions |
|--------------------------------------|----------|
| Small time deposits                         | $1250     |
| Money-market mutual funds held by businesses | $1300    |
| Savings deposits, including money-market deposit accounts | $1620    |
| Money-market mutual funds held by individuals | $905    |
| Checkable deposits                        | $836        |
| Currency                                        | $325       |

(a) What is the value of \( M1 \)? $__________ billion

(b) What is the value of \( M2 \)? $__________ billion

**Explanation:**

To calculate \( M1 \), add the values of checkable deposits and currency. To calculate \( M2 \), add all listed values, which typically include small time deposits, money-market mutual funds held by businesses, savings deposits, money-market mutual funds held by individuals, checkable deposits, and currency.
Transcribed Image Text:**3. Use the figures in the table below to answer the following questions.** | | Billions | |--------------------------------------|----------| | Small time deposits | $1250 | | Money-market mutual funds held by businesses | $1300 | | Savings deposits, including money-market deposit accounts | $1620 | | Money-market mutual funds held by individuals | $905 | | Checkable deposits | $836 | | Currency | $325 | (a) What is the value of \( M1 \)? $__________ billion (b) What is the value of \( M2 \)? $__________ billion **Explanation:** To calculate \( M1 \), add the values of checkable deposits and currency. To calculate \( M2 \), add all listed values, which typically include small time deposits, money-market mutual funds held by businesses, savings deposits, money-market mutual funds held by individuals, checkable deposits, and currency.
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