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: In the United States today, which of the following items are money? Question content area bottom

A: The total amount of money in an economy is measured using different metrics. To be considered as…

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: 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: Coins and bank notes in circulation (Rm) Year Demand deposits Short-term and medium-term deposits…

A: Measures of Money Supply : M1 for 2007 = Currency in circulation + Demand Deposits + Other Deposits(…

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: 4. Money stock Identify whether each of the following examples belongs in M1 or M2. If an example…

A:

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: Question 1 The M1 definition of the money supply includes all of the following EXCEPT Select one: a.…

A: M1 is the most liquid form of money supply. This includes Currency in circulation, travellers…

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: 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: conomics Charlie Brown is digging around in his attic and finds $2,000 in an old trunk. He takes the…

A: Answer to the question is as follows:

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: 6. An important routine function of the Federal Reserve Bank is to: A. supervise the liquidation of…

A: The federal reserve system refers to the central banking system that is followed in the U.S. The…

Q: What is the newest money supply tool available to the Fed? open market operations O the reserve…

A: The Fed (i.e., the Central bank of the US) has a responsibility to control the money supply in order…

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: What makes up global reserves? O The total money in all central banks O The International Monetary…

A: The global reserves would result in the reserves of the gold and other assets, which are cumulated…

Q: 5. What are the functions of money? (check all that apply) A) A medium of exchange B) A unit of…

A: Any widely used medium of exchange for goods and services in an economy is referred to as money. It…

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: Which of the following is not included in the definition of M2 Y money? A) official deposits B)…

A: M2 money supply is the form of money that include liquid money and near money that can be changed to…

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: Banking Question 2 Please use the balance sheet for Bank Alpha to answer the questions. Assume Bank…

A: The money multiplier is the concept of multiplication of money through the initial reserve, It is…

Q: How big is the money multiplier if the minimum required reserves ratio is 10 per cent? b 2 10

A: Required reserve ratio is the minimum requirement of deposits that banks are required to hold. Total…

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: 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: Еxcess Lender Required Reserves Bank New Deposit Reserves Borrower (Depositor) (Loans) James Bank A…

A: Money supply refers to the total amount of money that is in circulation in the economy. New deposits…

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

Q: Using the information below compute the M2 money supply. Category Currency and coin held by the…

A: M2 money supply describes the measure of money which includes cash, checking deposits, savings…

Q: 1.Name a reason why retail Money Market Mutual Funds are not included in M1 but demand deposits and…

A: Money: It refers to the cash used for the people for doing all the transactions in an economy. Money…

Q: Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash.…

A: Reserves are the part of bank stores that banks hold yet don't advance out. A required save ratio is…

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.