QUESTION 2 Suppose that currency and traveler\'s checks held by individuals and

Question

QUESTION 2 Suppose that currency and traveler's checks held by individuals and businesses are $883 bilion, checkable deposits owned by individuals and businesses are $705 billion; savings $1,213 billion. deposits are $5,003 billion; time deposits are $1,602 billion: and money market funds and other deposits are Calculate M1 (n billions). QUESTION 3 Suppose that currency and traveler's checks held by individuals and businesses are $817 billion: checkable deposits owned by individuals and businesses are $704 billion; savings deposits are $5,217 billion; time deposits are $1.983 billion: and money market funds and other deposits are $1,402 billion Calculate M2 (n billions).

Explanation / Answer

2. M1 = Traveler's checks + Checkable deposits = $ 883 billion + $ 705 billion = $ 1588 billion

3. M2 = M1 + Savings deposits + Time deposits + Money market funds

= (Traveler's checks + Checkable deposits) + 5217 billion + 1983 billion + 1402 billion

= 817 billion + 704 billion + 8602 billion

= $ 10,123 billion

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