Question

Assume that in a country there are the following assets: $700 Federal Reserve Notes in circulation, $400 in money market funds; $300 of corporate bonds; $50 Iron ore deposits; $100 currency in commercial banks; $140 in savings deposits; $1500 in checkable deposits; $100 in small denominated time deposits; and $40 coins in circulation. a. What is the value of M1 in this country

Answer 1

Answer: $2240

Step-by-step explanation:

The money supply simply refers to the total volume of money that is held by the public at a certain point in time. The value of M1 in this country will be calculated thus:

= Federal Reserve Notes in circulation + Coins in circulation + Checkable deposit

= $700 + $40 + $1500

= $2240

Therefore, M1 is $2240