14. Under Gresham’s law, the term bad money refers to: a. money with no face val
ID: 1221912 • Letter: 1
Question
14. Under Gresham’s law, the term bad money refers to:
a. money with no face value.
b. illegal tender.
c. devalued money.
d. commodity money.
e. money with low commodity value.
15. Which of the following would be counted as part of M1?
a. Money market deposit accounts
b. Savings deposits
c. Mutual funds
d. Traveler’s checks
e. Time deposits
16. The M2 measure of money supply includes all of the following, except:
a. demand deposits.
b. U.S. government securities.
c. savings deposits.
d. money market deposits.
e. certificates of deposit.
The FOLLOWING table given shows the components of money supply in an economy.
Table 1.1
Money Component
Amount (in millions)
Currency
$550
Travelers' Checks
$20
Savings Deposits
$180
NOW Accounts
$185
Small-Denomination Time Deposits
$620
Retail Money Market Mutual Funds
$605
ATS Accounts
$180
Demand Deposits
$210
17. Refer to Table 1.1 and calculate the value of M1.
a. $550 million
b. $570 million
c. $780 million
d. $1,125 million
e. $1,145 million
18. Refer to Table 1.1 and calculate the value of M2.
a. $1,145
b. $1,325
c. $1,750
d. $2,550
e. $2,815
Money Component
Amount (in millions)
Currency
$550
Travelers' Checks
$20
Savings Deposits
$180
NOW Accounts
$185
Small-Denomination Time Deposits
$620
Retail Money Market Mutual Funds
$605
ATS Accounts
$180
Demand Deposits
$210
Explanation / Answer
14. e) Money with lower commodity value.
15. Traveler’s checks
16. certificates of deposit.
17. $1145 (550+ 20+ 185 + 180+ 210)
18. Option D
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