Question

End-of-Chapter Exercise 19 The table to the right shows hypothetical values, in billions of dollars. Use the table to calculate the M1 and M2 money supply for each year. (Enter your responses rounded to the nearest dollar.) 2009 920 675 5,500 2010 935 685 5,780 2011 2012 940 946 683 692 5,968 6,105 2009 2010 2011 2012 Total M1 Total M2 A Currency B. Money market mutual fund shares C. Saving account deposits D. Money market deposit accounts E. Demand and checkable deposits F. Small-denomination time deposits G. Traveler's checks H. 3-month Treasury 1,205 980 820 3 1,976 1.236 962 851 3 2,384 1,265 1,320 960 973 1,113 1,556 2 1 2.426 2.492 bills

Answer 1

2009 2010 2011 | 2012 Total Mi 1903 | 1890 1902 1920 Potal m2 10103 10442 10931 11593 Here are two definitions of money: Mi and M2 money supply Mi Money Supply includes those monies that are very liquid such as cash, checkable (demand) deposits, and traveler's cheques. M2 money supply includes those money which are less liquid in nature and includes Mi plus savings & time deposits, Certificates of deposits, money market funds Here m. includes: Currency + Demand and checkable deposits + Praveler's cheque Ma includes: Mit money market atual fund shares + Savings deposits accounts + money market deposit acount of small- denomination time deposits. Note: 3 month Treasury bills are not considered are the part of My or M2 Money supply, even though they are fairly liquid assets.