Question

Consider the following:​

a) $20 billion in Canada Savings bonds are included in Blank 1 M2++
only b) ​$15 billion in savings accounts are included in Blank 2 M2, M2+ and M2++
c) A​ $1,000 balance in a checking deposit at a chartered bank is included in Blank 3 M1, M2, M2+ and M2++ d) A​ $10,000 savings account deposit an elderly widow holds at her credit union is included in Blank 4 M2, M2+ and M2++

Answer 1

M2++ includes $20 billion in Canada Savings bonds, M2, M2+, and M2++ include $15 billion in savings accounts, M1, M2, M2+, and M2++ include a $1,000 balance in a checking deposit, and M2, M2+, and M2++ include a $10,000 savings account deposit held by an elderly widow.

Step-by-step explanation:

Blank 1 refers to M2++, the broader definition of money that includes everything in M1 but adds other types of deposits. M1 includes cash, checkable deposits, and travelers' checks. In this case, the $20 billion in Canada Savings bonds are included in M2++ only.

Blank 2 refers to M2, M2+, and M2++. M2 includes savings deposits in banks, which are bank accounts that cannot be used to write checks directly but can be easily withdrawn from ATMs or banks. Therefore, the $15 billion in savings accounts are included in M2, M2+, and M2++.

Blank 3 refers to M1, M2, M2+, and M2++. M1 includes cash, checkable deposits, and travelers' checks. A $1,000 balance in a checking deposit at a chartered bank is considered part of the M1 money supply. Therefore, it is included in M1, M2, M2+, and M2++.

Blank 4 refers to M2, M2+, and M2++. M2 includes savings deposits in banks. Therefore, the $10,000 savings account deposit held by the elderly widow at her credit union is included in M2, M2+, and M2++.