1) A bank has checking deposits of $400, saving deposits of $900, time deposits of $900,...
1) A bank has checking deposits of $400, saving deposits of $900, time deposits of $900, loans of $950, government securities of $900, outstanding credit card balances of $400, currency in its vault of $40, and deposits in its reserve account at the Fed of $40.
- What is the amount of this bank's deposits that are in M1?
- What is the amount of this bank's deposits that are in M2?
- What is the amount of this bank's reserves?
Homework Answers
(a) The amount of this bank's deposits in M1= Checking deposits= $400.
(b) The amount of this bank's deposits in M2= Checking deposits + Saving deposits + Time deposits = $(400+900+900)= $2200.
(c) The amount of this bank's reserves= Current in its vault + Deposits in its reserve account at the Fed= $(40+40)= $80.
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