Question

Use the following table to determine the levels of m1 and m2 in the united states. Money categories in the united states asset amount (billions of dollars) currency $82 demand deposits 80 money market funds 44 other checkable deposits 37 savings deposits 460 small time deposits 22 traveler's checks 4 instructions: enter your answers as a whole number. A. Calculate the m1 money supply. $ billion b. Calculate the m2 money supply. $ billion

Answer 1

To calculate the M1 money supply, add currency, demand deposits, and traveler's checks to get $166 billion. For the M2 money supply, add savings deposits, small time deposits, and money market funds to M1, for a total of $692 billion.

Step-by-step explanation:

Calculating M1 and M2 Money Supply

To calculate the M1 money supply, you add together the currency, demand deposits, and traveler's checks. In this case, M1 would be:

Currency: $82 billion

Demand Deposits: $80 billion

Traveler's Checks: $4 billion

Total M1 money supply = $82 billion + $80 billion + $4 billion = $166 billion.

To calculate the M2 money supply, you take the M1 money supply and add savings deposits, small time deposits, and money market funds to it. In this case, M2 would be:

M1 money supply: $166 billion

Savings Deposits: $460 billion

Small Time Deposits: $22 billion

Money Market Funds: $44 billion

Total M2 money supply = $166 billion + $460 billion + $22 billion + $44 billion = $692 billion.

Therefore, the M1 money supply is $166 billion and the M2 money supply is $692 billion. Enter your answers as whole numbers, with M1 being 166 and M2 being 692 in billion dollars.