Question

Currency ​$1,000

Checking Account Balances ​$2,000
Savings Account Balances ​ $5,000 ​
Small-Denomination Time Deposits ​ $6,000
Noninstitutional Money Market Fund Shares ​ $7,000

Consider the information in the scenario above for a simple economy. Assume there are no​ traveler's checks. M2 in this simple economy equals:

Answer 1

$3,000 and $21,000

Step-by-step explanation:

For computing the M2 first we have to find out the M1 which is shown below:

M1 is

= Currency + Checking Account Balances

= $1,000 + $2,000

= $3,000

Now

M2 is

= M1 + Savings Account Balances + Small Denomination Time Deposits + Non-institutional Money Market Fund Shares

= $3,000 + $5,000 + $6,000 + $7,000

= $21,000

we simply applied the above formulas