EBK ECONOMICS OF MONEY, BANKING AND FIN
EBK ECONOMICS OF MONEY, BANKING AND FIN
5th Edition
ISBN: 8220106799727
Author: Mishkin
Publisher: PEARSON
Question
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Chapter 3, Problem 16Q
To determine

The effect on M1 and M2 measure of money supply when we invest some money in money market funds by writing a check.

Concept Introduction:

Money supply refers to the official stock of money supplied in a country at a particular point of time. There are some measures of money supply, these are:

M1 . Currency in circulation + Demand deposits

M2 . M1 . Short term time deposits in the banks & 24-hour money market funds

M3 . M2 . Long-term time deposits & money market funds with more than 24-hour maturity.

M4 . M3 . other deposits.

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