Homework Answers
Ans.1.
M1 measure of money = Fed. reserve notes in circulation + Checkable deposits + Coins in circulation +
= 700 + 1500 + 40
= 2240
M2 measure of money = M1 + Currency in commercial banks( time deposits) + Saving Deposits ,incl. money market + Money market mutual funds
= 2240 + 100 + 140 + 400
= 2880
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Ans.2.
Actual reserve = Excess Reserve + Checkable deposits(RR%)
= 8000 + 150,000 ( 0.20)
= 8000 + 30000 = $38,000
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