Table 16-1. The information in the table pertains to an imaginary economy. Type
ID: 1215317 • Letter: T
Question
Table 16-1. The information in the table pertains to an imaginary economy. Type of Money Amount Large time deposits $80 billion Small time deposits $75 billion Demand deposits $75 billion Other checkable deposits $40 billion Savings deposits $10 billion Traveler's checks $1 billion Money market mutual funds $15 billion Currency $110 billion Credit card balances $10 billion Miscellaneous categories of M2 $25 billion Refer to Table 16-1.
What is the M1 money supply? (Points : 5) $215 billion $216 billion $226 billion $301 billion
Explanation / Answer
Answer is 226.
Demand deposits=75
Currency=110
Chequable deposits=40
Traveller's cheque=1
Adding up these result in M1=226 Billion.
For your reference:
M1 is a measure of the money supply that includes all physical money, such as coins and currency, as well as demand deposits, checking accounts and Negotiable Order of Withdrawal (NOW) accounts. M1 measures the most liquid components of the money supply, as it contains cash and assets that can quickly be converted to currency.
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