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Consider the table presenting information about an economys money supply. $982 billion Currency in circulation Checkable deposits Savings accounts Money market mutual funds $1,334.7 billion $6,3122 lion $695.3 billion Calculate the values of MI and M2 Time deposits less than $100,000 $797.3 billion Travelers checks Gold coins $4.7 billiorn $1.4 billion billion billion

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Answer #1

(1)

M1 ($ Billion) = Currency in circulation + Checkable deposits + Travelrsw' checks = 982 + 1,334.7 + 4.7

= 2,321.4

(2)

M2 ($ Billion) = M1 + Savings account + Money market mutual fund + Time deposit = 2,321.4 + 6,312.2 + 695.3 + 797.3

= 10,126.2

NOTE: Gold coin is not a currency or coin in circulation with public and is excluded from M1 or M2 computation.

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