Part 2 - Practice- For each of the following examples, identify if it is considered M1 money supply, M2 money supply, or not counted (NC) in the U.S. money supply.   1. A $20 bill given to you by your grandma 2. You have $400,00 equity in real estate 3. A $100 deposit in your savings account 4. A $20 gift card 5. $100 in your checking account 6. $10 trillin dollars of Zimbabwe currency 7. $50,000 in Amazon stock 8. $1,000 in a money market account 9. $1 Trillion in the U.S. Treasury 10. A $300 certificate of deposit 11. Bitcoin worth $10,000 12. $20 bill in your pocket

Q: 31. If the required reserve ratio is 5%, what is the level of excess reserves this bank holds? Oa)…

A: The required reserve ratio is the percentage of demand deposits that banks have to keep in reserve.…

Q: Refer to the following table to answer the next three questions. Checkable deposits Currency…

A: Answer: M1: M1 includes highly liquid assets.  M1= Currency + Checkable deposits + Traveler's check…

Q: Item Dollars In Billions Checkable Deposits $600 Small Time Deposits $700 Currency $500 Money-Market…

A: M1 refers to the money supply, which is made up of cash, demand deposits, and other liquid deposits,…

Q: Currency $ 200 billion Sight deposits $ 4500 billion Saving deposits $ 20000 billion Time deposits $…

A: Here we calculate the following terms by using the given information and use the relevant formula…

Q: 2. Determine whether each of the following is included in both M1 and M2 or M2 only: a. a…

A: M1 and M2 refer to different measures of the money supply in an economy:M1: M1 is a narrow measure…

Q: 1. What would be the level of excess reserves if the required reserve ratio were 20%?     a) There…

A: Fractional reserve banking is a banking system where banks retain only a portion of their deposited…

Q: 17. Suppose the Canadian banking system jointly has $40 million in reserves, all banks have a target…

A: Given; Amount banks has as reserves= $40 millions Required reserve ratio= 8% Formula to calculate…

Q: Use the table below for the next set of questions.  Column 1 shows the interest rate, column 2 shows…

A: “Since you have posted multiple questions, we will provide the solution only to the first question…

Q: When our children were young, we saved their personal funds like cash birthday gifts in savings…

A: M1 is the measure of money which includes the following - M1 = Cash + Checking Deposits + Demand…

Q: Table 2 Bank of Duluth Assets Liabilities Deposits Reserves $240,000 $19,200 220,800 Loans Refer to…

A: Given  Reserves =$19200 Deposit = $240,000   We have to calculate the change in money supply when…

Q: Consider the following data. Calculate M1. $ Calculate M2. $ billion. billion. Item Currency Savings…

A: Money refers to anything that can be used as a medium of exchange.It should be widely accepted.There…

Q: The use of money is more efficient than barter because the introduction of moneyTop of Form reduces…

A: Money is a resource or asset that is accepted and used as an exchange medium to buy commodities and…

Q: Suppose that your bank's reserve ratio is 0.2 and you deposit $50,000 into the bank. Assume that the…

A: Note:  “Since you have posted multiple questions, we will provide the solution only to the first…

Q: Q-1 Suppose that the T-account for Sovereign Bank is as follows and the reserve requirements ratio…

A: The reserve ratio refers to the fraction of deposits that banks will be required to keep reserves.…

Q: Bank pass book is also known as

A: A particular kind of financial organization known as a bank provides a range of financial services…

Q: 1. You deposit $100 of currency into your account. Explain what happens to reserves , checkable…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: 9.  Which of the following would not be included as part of M2?   demand deposits money market…

A: Money is the medium of exchange, store of value and unit of account.

Q: Banks create money by O Making loans O Sending out credit cards to depositors O Increasing the…

A: Banks can create money by making loans as most of the banking systems in the world are fractional…

Q: 2. Which of the following best describes fiat money! (A) Money that is backed by a commodity such as…

A: Economists classified money into four following category.  Fiat money Commodity money Commercial…

Q: Loans $8,000 Debt $800 Short-term securities $800 Capital (owners' equity) $200 Refer to Table 2.…

A: Required reserve ratio refers to the proportion of deposits that the Fed mandates the commercial…

Q: Small-denomination time deposits are included in which of the following measures of the money supply…

A: A time deposit is the deposit in a financial institution which has a specific maturity period. The…

Q: The money in your personal checking account is counted as:   A. Neither M1 nor M2 money…

A: M1 is the measure of money which includes -  M1 = Cash + Demand Deposits + Deposits in Checking…

Q: If a bank has a required reserve ratio of 25% and there are $5,300,000 in deposits, what is amount…

A: The formula for required reserves : deposits × required reserve ratio = 5,300,000 × 0.25 =…

Q: 1. Assume the Standard Toy Company negotiates a loan for $5,000 from the Metro Bank and receives a…

A: The issue you raised has to do with monetary policy and macroeconomics. It covers topics like the…

Q: d. Using the original figures, revisit questions a, b, and c based on the assumption that the…

A: DISCLAIMER "Since you have posted a question with multiple subparts, we will solve first three…

Q: Use the following table to determine the levels of M1 and M2 in the United States. Money Categories…

A: Money- It is used as a form of exchange to carry out transactions. It is a generally accepted medium…

Q: Labor (# of employees) 0 1 2 3 4 5 6 The table shows the total production of burritos ( Multiple…

A: According to the law of diminishing marginal productivity, when more and more units of a variable…

Q: 1. Methods used by central bank to control money supply in the economy

A: In the banking industry, the central bank is the leading organisation. The operations of all other…

Q: Determine whether each of the following is included in both M1 and M2 or M2 only:               a.…

A: M1 and M2 refer to different measures of the money supply in an economy:M1: M1 is a narrow measure…

Q: Debit/credit card are considered to be Question 12 options:   Line of credit       M1 money…

A: Debit cards allow you to spend money by drawing on funds you have deposited at the bank. Credit…

Q: Big bucks bank Assets…

A: A loan is a financial transaction in which one party (the lender) provides money or assets to…

Q: view picture

A: In consequence to the Federal Reserve buying the government bonds, the changes to First Main Street…

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.