Economics Today: The Macro View (18th Edition)
18th Edition
ISBN: 9780133884876
Author: Roger LeRoy Miller
Publisher: PEARSON
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Chapter 15, Problem 7P
To determine
Concept introduction:
Measures of Money Supply- An aggregate of the money assets in the economy at a given point of time is commonly known as the Money Supply in the economy. There are varied measures of money supply but the standard among them are M0, M1, M2, M3 and M4.
| Measure | Includes | Means |
| M0 | Currency; Coins, Cash and Other demand deposits and liquid assets held by the central bank | Narrow money; smallest measure of money supply; most liquid financial assets |
| MB | M0 + Vault cash with Central Bank + Excess and |
Monetary Base; Total currency in the economy. It is the basis of the creation of M1,M2,M3 and M4. |
| M1 | M0+Traveler’s checks of non-bank issuers +Demand deposits (chequing accounts and sight deposits) + OCDs (Other Checkable Deposits) + NOW (Negotiable Order of Withdrawal) at depository institutions and credit union share draft accounts. | Very liquid money (often narrow money too) |
| M2 | M1+ Savings Deposits + |
Broad Money or Narrow Money +“Near Money” |
| M3 | M2 + Large Time Deposits +Institutional Money Market Funds + Short term Purchases + | Broadest measure of money supply- “Near, near Money” and relate to large financial institutions and corporations than individuals and small businesses |
| M4 | M3+all other deposits | Least liquid form of money supply. In UK, M3 is M4. The use of measures varies from country to country |
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Chapter 15 Solutions
Economics Today: The Macro View (18th Edition)
Ch. 15 - Prob. 15.1LOCh. 15 - Prob. 15.2LOCh. 15 - Prob. 15.3LOCh. 15 - Prob. 15.4LOCh. 15 - Prob. 15.5LOCh. 15 - Prob. 15.6LOCh. 15 - Prob. 15.1SCCh. 15 - Prob. 15.2SCCh. 15 - Prob. 15.3SCCh. 15 - Prob. 15.4SC
Ch. 15 - Prob. 15.5SCCh. 15 - Prob. 15.6SCCh. 15 - Prob. 1CTQCh. 15 - Prob. 2CTQCh. 15 - Prob. 1FCTCh. 15 - Prob. 2FCTCh. 15 - Prob. 1PCh. 15 - Prob. 2PCh. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - Prob. 5PCh. 15 - Prob. 6PCh. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13PCh. 15 - Prob. 14PCh. 15 - Prob. 15PCh. 15 - Prob. 16PCh. 15 - Prob. 17PCh. 15 - Prob. 18PCh. 15 - Prob. 19P
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