Final answer:
M1 money supply is $2,321.4 billion, including currency in circulation, checkable deposits, and traveler's checks. M2 money supply, which includes all of M1 plus savings accounts, time deposits, and money market mutual funds, is $10,126.2 billion.
Step-by-step explanation:
To calculate the values of M1 and M2, we must first understand what each category of money supply includes. According to the definitions provided:
- M1 money supply includes coins and currency in circulation, checkable deposits (also known as demand deposits), and traveler's checks. Gold coins, while a form of currency, are typically not included in M1 as they are not commonly used in transactions.
- M2 money supply includes all of M1, plus savings accounts, time deposits less than $100,000, and individual money market mutual fund balances.
Now, let's calculate each:
- M1: Currency in circulation ($982 billion) + Checkable deposits ($1,334.7 billion) + Traveler's checks ($4.7 billion) = $2,321.4 billion
- M2: M1 ($2,321.4 billion) + Savings accounts ($6,312.2 billion) + Time deposits less than $100,000 ($797.3 billion) + Money market mutual funds ($695.3 billion) = $10,126.2 billion