Use the following table to determine the levels of M1 and M2 in the United States. Money Categories in the United States AssetAmount (billions of dollars)Currency$86Demand deposits83Money market funds45Other checkable deposits39Savings deposits472Small time deposits24Traveler's checks5 Instructions: Enter your answers as a whole number. a. Calculate the M1 money supply. $ billion b. Calculate the M2 money supply. $ billion

Answered: Use the following table to determine…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the following table to determine the levels of M1 and M2 in the United States.

Money Categories in the United States

Asset	Amount (billions of dollars)
Currency	$86
Demand deposits	83
Money market funds	45
Other checkable deposits	39
Savings deposits	472
Small time deposits	24
Traveler's checks	5

Instructions: Enter your answers as a whole number.

a. Calculate the M1 money supply.

$ billion

b. Calculate the M2 money supply.

$ billion

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Expert Solution

Step 1

M1 and M2 are money supply which are also part of narrow money.

M1 includes currency, demand deposits, and traveler's check.

M2 consists of all the components of M1 in addition to savings and time deposits, money market funds and certificate of deposit.

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