Checkable Bank Deposits $2 Trillion Savings Bank Deposits $7.5 Trillion Currency in Circulation $1.5 Trillion Travelers Checks $0.5 Trillion Certificates of Deposit (CDs) $0.5 Trillion. What is the value of M2 that is not part of M1? $8 Trillion $4 Trillion O $9.5 Trillion O $12 Trillion O $11 Trillion

Checkable Bank Deposits $2 Trillion Savings Bank Deposits $7.5 Trillion Currency in Circulation $1.5 Trillion Travelers Checks $0.5 Trillion Certificates of Deposit (CDs) $0.5 Trillion. What is the value of M2 that is not part of M1? $8 Trillion $4 Trillion O $9.5 Trillion O $12 Trillion O $11 Trillion

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter13: Money And The Banking System

Section: Chapter Questions

Problem 18CQ

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If you take 100 out of your piggy bank and deposit it in your checking account, how did M1 change? Did M2 change?
2. 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
QUESTIONS 1 Jane Doe has the following assets: $100 in her wallet $800 in her demand deposit account $1,000 in her savings account A $50 traveler’s check from her last trip to China A $300 outstanding credit card bill A car worth $5,000 A house worth $200,000 Identify which of the assets are included in M1, which are in M2, or neither M1 nor M2. ii) Suppose she takes $400 for her demand deposit account and deposits it in her savings account. What is the change in M1 and M2? b) Many savers choose to hold their funds at a financial intermediary instead of lending them directly in financial markets. Explain TWO (2) reasons why financial…
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6. Which of the following would not be counted as part of M1? demand deposits traveler’s check money market accounts currency
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9 If the interest rate................... opportunity cost of holding money decreases, and the quantity demanded of money increases; decreases decreases; increases £0000 increases; also increases does not change; does not change 10 If the total deposits-on-demand in Bank A total $500 mil and the required reserve ratio is 2.5 percent, then required reserves at Bank A equal more than 1,300,000,000 equal to 13,000,000 less than 13,000,000 more than 13,000,000
8. The money multiplier declined significantly during the period 1930–1933 and alsoduring the recent financial crisis of 2008–2010. Yet the M1 money supply decreasedby 25% in the Depression period but increased by more than 20% during the recentfinancial crisis. What explains the difference in outcomes?
17. Use the following table to find the value of M1 in the economy of Theendisnear. (Note economists in Theendisnear define M1 in the same way as economists in the US.) Savings account deposits Cash in the hands of the public Small time deposits $522,000 $197,500 $450,000 $20,000 Checkable deposits $462,500 a. $1,182,000 b. $310,000 c. $660,000 d. $330,000 Required reserves
2. Suppose your bank lowers its minimum balance requirement by $500. So you take $500 out of your checking account and invest in Money Market Mutual Funds. What is the overall effect on M1 and M2? a. M1 falls by $500, M2 rises by $500. b. M1 is unchanged, M2 is unchanged. c. M1 falls by $500, M2 is unchanged. d. M1 is unchanged, M2 rises by $500.