Briefly explain whether each of the following is counted in M1. 1)The coins in your pocket 2) The funds in your checking account 3)The funds in your savings account 4)Bitcoin in your mobile wallet 5) Your Citibank Platinum MasterCard

Briefly explain whether each of the following is counted in M1. 1)The coins in your pocket 2) The funds in your checking account 3)The funds in your savings account 4)Bitcoin in your mobile wallet 5) Your Citibank Platinum MasterCard

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter27: Money And Banking

Section: Chapter Questions

Problem 3SCQ: If you are out shopping for clothes and books, what is easiest and most convenient for you to spend:...

See similar textbooks

Similar questions

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?
Suppose you’re at the mall shopping for a pair of shoes and run into NBA player LeBron James. You help him find a perfect gift to give his teammate, Alex Caruso. As thanks for your help, he signed the jersey off his back and gave it to you. Even though his jersey is a valuable asset, why would it not serve as a very good form of money in your attempt to buy shoes? Use the three primary functions of money in your explanation.
Personal possession of currency is prohibited in U.S. prisons, although, in practice, prisoners still exchange goods and services. U.S. prisoners used cigarettes as a medium of exchange until smoking was banned in U.S. prisons in 2003. After 2003, prisoners looked to other items on the commissary menu to facilitate exchange. In 2008, the Wall Street Journal reported that energy bars had caught on as money in some U.S. prisons. One important difference between using energy bars and using dollars as money is that____ have intrinsic value. Energy bars are an example of ___ money.
Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $400. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 20 10 Simple Money Multiplier A higher reserve requirement is associated with a Money Supply (Dollars) money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to $ worth of U.S. government bonds. Now, suppose that, rather than immediately lending out all…
Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $100. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 15 10 Simple Money Multiplier Money Supply (Dollars) A lower reserve requirement is associated with a money supply. Suppose the Federal Reserve wants to increase the money supply by $100. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to $ worth of U.S. government bonds. Now, suppose that, rather than immediately lending out all excess…
Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $100. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 25 10 Simple Money Multiplier A lower reserve requirement is associated with a Money Supply (Dollars) money supply. Suppose the Federal Reserve wants to increase the money supply by $100. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to U.S. government bonds. S worth of Now, suppose that, rather than immediately lending out all excess…
FRONT PAGE ECONOMICS The FTX Collapse In a mere 10 days, $32 billion vanished into thin air. That was the market value on November 8, 2022, of the cryptocurrency exchange company called FTX. FTX had an exchange platform that handled customer purchases and sales of cryptocurrencies, including its own FTT. Like Bitcoin, FTT was a cryptocurrency that could be used to transfer money, make purchases, or be held as wealth. Or so people thought. In reality, a lot of money deposited into FTX customer accounts was being diverted into the personal accounts of the company's owner and key associates. When customers wanted to withdraw their deposits, the cupboard was bare. On November 11, 2022, FTX filed for bankruptcy. The price of an FTT token fell from $24 on November 8 to $1.27 on November 23. Thousands of FTX customers and investors lost millions of dollars, including celebrities like Tom Brady, Steph Curry, and Naomi Osaka. The University of California football team and the Miami Heat also…
Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 25%. The Federal Reserve buys a government bond worth $1,800,000 from Felix, a customer of First Main Street Bank. He deposits the money into his checking account at First Main Street Bank. Now, suppose First Main Street Bank loans out all of its new excess reserves to Deborah, who immediately writes a check for the full amount to Carlos. Carlos then immediately deposits the funds in his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Larry, who writes a check to Janet, who deposits the money in her account at Third Fidelity Bank. Finally, Third Fidelity lends out all of its new excess reserves to Megan. Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $1,800,000 injection…
Q12. The following is hypothetical financial information about the US economy. What is M1 and M2? Items Amounts owed on credit cards Amount $279 billion Traveler's checks held by the public Savings deposits $38 billion $400 billion Credit limits on credit cards $514 billion Bills and coins in circulation $615 billion Checking account deposits $905 billion Small time deposits $2,321 billion Mutual funds held by public $2,956 billion M1 is $1,958 billion and M2 is $7,235 billion. M1 is $1,558 billion and M2 is $7,235 billion. M1 is $1,958 billion and M2 is $7,514 billion. M1 is $1,558 billion and M2 is $7,514 billion.
Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $500. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 5 10 Simple Money Multiplier A higher reserve requirement is associated with a Money Supply (Dollars) money supply. Suppose the Federal Reserve wants to increase the money supply by $100. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to worth of U.S. government bonds. Now, suppose that, rather than immediately lending out all excess…
Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 20%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 750,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Kate, who immediately uses the funds to write a check to Hubert. Hubert deposits the funds immediately into his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Shen, who writes a check to Poornima, who deposits the money into her account at Third Fidelity Bank. Third Fidelity lends out all of its new excess reserves to Valerie in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Increase in Deposits Increase in Required Reserves…
Question 5 Homework ⚫ Answered ⚫ Due Jul 24th, 11:50 PM MONEY IN THE ECONOMY ($billions) Currency held by the public = $1,000 Demand Deposits = $3,000 Other Liquid Deposits = $12,000 Small Denomination Time Deposits = $500 Retail Money Market Funds = $1,500 Use the information above to answer this item. If depositors move $100 billion from demand deposits to small denomination time deposits, then: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a b C the value of M1 stays the same, the value of M2 increases by $100 billion, and the system becomes less liquid. the value of M1 decreases by $100 billion, the value of M2 stays the same, and the system becomes less liquid. the value of M1 decreases by $100 billion, the value of M2 increases by $100 billion, and the system becomes less liquid. × Your answer d the value of M1 stays the same, the value of M2 stays the same, and the liquidity of the system does not change.