The following table shows the money supply for country SODA in the year 2018. Items USD Million Checking Account Saving account Jar of coins for laundry 135 500 155 Cash 350 Time deposits Money market mutual fund 216 324

The following table shows the money supply for country SODA in the year 2018. Items USD Million Checking Account Saving account Jar of coins for laundry 135 500 155 Cash 350 Time deposits Money market mutual fund 216 324

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter12: Money And Banking

Section: Chapter Questions

Problem 10E

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

100%

a. M1 deposits b. M2 deposits

The following table shows the money supply for country SODA in the year 2018.
Items
USD Million
Checking Account
Saving account
Jar of coins for laundry
135
500
155
Cash
350
Time deposits
Money market mutual fund
216
324

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