Assume that the following asset values (in millions of dollars) exist in Ironman

Question

Assume that the following asset values (in millions of dollars) exist in Ironmania Category Value Federal Reserve notes in circulation Money market mutual funds (MMMFs) held by individuals Corporate bonds Iron ore deposits Currency in commercial banks Savings deposits, including money market deposit accounts (MMDAs) Checkable deposits Small-denominated (less than $100,000) time deposits Coins in circulation 850 400 300 50 110 140 1,600 100 40 Instructions: Enter your answers as whole numbers a. What is M1 in Ironmania? million b. What is M2 in Ironmania? million

Explanation / Answer

Answer.)

M1 = Federal Reserve Notes in circulation + Checkable Deposits + Coins in circulation = $850 + $1600 + $40 = $2490 million

M2 = M1 + MMMF's held by individuals + Saving deposits + small denominated time deposits = $2490 + $400 + $140 + $100 = $3130 million

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