Question

in december 2009, currency was $1400 billion, traveler's checks were $5 billion; checkable deposits owned by individuals and businesses were $600 billion, saving deposits were $3,000 billion, time deposits were $1,800 billion; and money market funds were $1,200 billion. what was the m1 in december 2009?

Answer 1

To calculate the M1 money supply in December 2009, add the currency ($1400 billion), traveler's checks ($5 billion), and checkable deposits ($600 billion) which totals to $2005 billion. Hence, the M1 money supply for December 2009 was $2005 billion.

Step-by-step explanation:

To calculate the M1 money supply in December 2009, we need to add together the components that are included in M1 according to the definitions of money supply. M1 includes the total amount of currency in circulation, traveler's checks, and checking account balances (often referred to as demand deposits). It is important to differentiate these from what is included in M2, which adds savings deposits, time deposits like certificates of deposit, and money market funds.

In December 2009, the M1 was calculated by adding:

Currency ($1400 billion)

Traveler's checks ($5 billion)

Checkable deposits owned by individuals and businesses ($600 billion)

By adding these components, we get:

M1 = $1400 billion + $5 billion + $600 billion = $2005 billion

Therefore, the M1 money supply in December 2009 was $2005 billion.