EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 32, Problem 1P
Sub part (a):
To determine
The M1 measure of money supply.
Sub part (b):
To determine
The M2 measure of money supply.
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Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40.
Recall, M1 equals Federal Reserve Notes in circulation plus checkable deposits plus Coins in circulation. M2 equals M1 plus Savings deposits, including Money market deposit accounts (MMDAs) plus Small-denominated (less than $100,000) time deposits plus Money Market Mutual Funds (MMMFs) held by individuals.
1.1. What is M1 in Ironmania? Show your computation.
1.2. What is M2 in Ironmania? Show your computation.
Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40.
Hints: Recall, M1 equals Federal Reserve Notes in circulation plus checkable deposits plus Coins in circulation. M2 equals M1 plus Savings deposits, including Money market deposit accounts (MMDAs) plus Small-denominated (less than $100,000) time deposits plus Money Market Mutual Funds (MMMFs) held by individuals.
Part 1:What is M1 in Ironmania?
Part 2: What is M2 in Ironmania?
Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve notes in circulation = $700; Money market mutual funds held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts = $140; Checkable deposits = $1,500; Small denominated (less than $100,000) time deposits = $100; Coins in circulation = $40.
What is M1 in Ironmania?
What is M2 in Ironmania?
Chapter 32 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 32 - Prob. 1DQCh. 32 - Prob. 2DQCh. 32 - Prob. 3DQCh. 32 - Prob. 4DQCh. 32 - Prob. 5DQCh. 32 - Prob. 6DQCh. 32 - Prob. 7DQCh. 32 - Prob. 8DQCh. 32 - Prob. 9DQCh. 32 - Prob. 10DQ
Ch. 32 - Prob. 11DQCh. 32 - Prob. 12DQCh. 32 - Prob. 13DQCh. 32 - Prob. 14DQCh. 32 - The three functions of money are: LO34.1 a....Ch. 32 - Prob. 2RQCh. 32 - Prob. 3RQCh. 32 - Prob. 4RQCh. 32 - Prob. 5RQCh. 32 - Prob. 6RQCh. 32 - Prob. 7RQCh. 32 - Prob. 8RQCh. 32 - Prob. 9RQCh. 32 - Prob. 1PCh. 32 - Prob. 2PCh. 32 - Prob. 3PCh. 32 - Prob. 4PCh. 32 - Prob. 5P
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- Question 1 Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40. Recall, M1 equals Federal Reserve Notes in circulation plus checkable deposits plus Coins in circulation. M2 equals M1 plus Savings deposits, including Money market deposit accounts (MMDAs) plus Small-denominated (less than $100,000) time deposits plus Money Market Mutual Funds (MMMFs) held by individuals What is M1 in Ironmania? What is M2 in Ironmania? The Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Households deposit $5000 in currency into…arrow_forwardquestion 1. this question has two parts; 1a and 1b. Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40. (Recall, M1 equals Federal Reserve Notes in circulation plus checkable deposits plus Coins in circulation. M2 equals M1 plus Savings deposits, including Money market deposit accounts (MMDAs) plus Small-denominated (less than $100,000) time deposits plus Money Market Mutual Funds (MMMFs) held by individuals.) 1a. What is M1 in Ironmania? Show your computation. 1b. What is M2 in Ironmania? Show your computation.arrow_forwardAssume that the following asset values (in millions of dollars) exist in Ironmania: Category Value (Millions) Federal Reserve Notes in circulation $750 Money market mutual funds (MMMFS) held by individuals 400 Corporate bonds 300 Iron ore deposits 50 Currency in commercial banks 100 Savings deposits, including money market deposit accounts (MMDAS) 140 Checkable deposits 1,500 Small-denominated (less than $100,000) time deposits 100 Coins in circulation 40 Instructions: Enter your answers as a whole number. a. What is M in Ironmania? million b. What is M2 in Ironmania? million %24arrow_forward
- Assume that the following asset values (in millions of dollars) exist in Ironmania: Category Value (Millions) Federal Reserve Notes in circulation $700 Money market mutual funds (MMMFS) held by individuals 400 Corporate bonds 300 Iron ore deposits 50 Currency in commercial banks 110 Savings deposits, including money market deposit accounts (MMDAS) 140 Checkable deposits 1,600 Small-denominated (less than $100,000) time deposits 100 Coins in circulation 40 Instructions: Enter your answers as a whole number. a. What is MM in Ironmania? million b. What is M2 in Ironmania? millionarrow_forwardAssume the Continental National Bank's balance statement is as follows:Assets:reserves $40,000loans $25,000securities $110,000Liabilities + net worthcheckable deposits $130,000stock shares $45,000Assuming a legal reserve ratio of 20 percent, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?$3,000.$24,000.$6,000.$16,000.arrow_forwardA2-2. Suppose the consolidated balance sheet (T-account) of the banking system for an economy with a regulated reserve ratio of 10% is given below. If the regulator decreases the reserve ratio to 8%, the money supply will increase by 250. [Hint: Assume that the public holds all its money in the form of bank deposits.] Assets: Liabilities: Reserves 100 Deposits 1000 Government Bonds 300 Loans Outstanding Total 800 Capital Total 200 1200 1200arrow_forward
- Consider the following data on the Federal Reserve's balance sheet: securities held outright 10000, discount loans to banks = 2000 and currency in circulation = 5000 of which all is held by the non-bank public. Assume that all categories of the Fed's balance sheet not mentioned are zero. Private commercial banks have a desired reserve ratio of 10%. Compute the numerical value of the following (do not use dollar signs, commas or decimals): %3D monetary base reserye balances at the Fed checking deposits at banksarrow_forwardAssume that the following asset values (in millions of dollars) exist in Ironmania: Category Value Federal Reserve Notes in circulation $800 Money market mutual funds (MMMFS) held by individuals 400 Corporate bonds Iron ore deposits Currency in commercial banks Savings deposits, including money market deposit accounts (MMDAS) Checkable deposits Small-denominated (less than $100,000) time deposits 300 50 110 140 1600 100 Coins in circulation 40 a. What is M1 in Ironmania? $ million b. What is M2 in Ironmania? $ millionarrow_forwardThe table below reports the breakdown of assets and liabilities for all commercial banks for January 2020, two months before the start of the COVID-19 recession, and December 2020. Assets (in billions of dollars) Liabilities (in billions of dollars) Jan-20 Dec-20 Jan-20 Dec-20 Loans $10,041.54 $10,376.47 Deposits $13,293.30 $16,061.82 Reserves $1,768.52 $3,168.94 Borrowings $1,965.90 $1,715.81 Treasury Securities $3,008.19 $3,726.10 Other Liabilities $593.42 $825.74 Other Assets $2,984.52 $3,224.45 Total Assets $17,802.77 $20,495.96 Total Liabilties $17,802.77 $20,495.96 From January to December, the net worth of banks changed by $___ billion (round your answer to two decimal places).arrow_forward
- In response to the Covid-19 recession of 2020, the Fed introduced temporary lending facilities that allowed it to make facility, allowed the Fed loans to businesses other than commercial banks. One of these facilities, known as the to provide funds directly to nonfinancial firms and state and local governments by either granting them loans or buying their bonds. liquidity leverage credit mortgage lenderarrow_forwardTotal reserves that a bank has at the Fed are $14 million. Currently the bank has excess reserves of $5 million and has made loans of $100 million. The Fed's reserve requirement for the bank is 6%. What is the maximum deposit level (in $ millions) the bank can expand to by utilizing its excess reserves? [Input your answer rounded to 1 decimal places. Just input the numerical value. You do not need to put the $ symbol or "millions" in your answer.]arrow_forward) The table below provides data for a hypothetical economy. Total value of corporate shares Currency outside chartered banks. Chequable notice deposits at chartered banks Publicly held demand deposits at chartered banks. Federal government bonds Other liquid assets included in M2+ Nonpersonal term and foreign-currency deposits at chartered banks Personal term deposits at chartered banks Non-chequable notice deposits at chartered banks Chequable notice deposits at near banks Personal term deposits at near banks Non-chequable notice deposits at near banks Based on this data: a. M1+ is $ b. M2 is $ c. M3 is $ d. M2+ is $ 278 billion billion. billion, billion. $500 billion $42 billion $102 billion. $45 billion. $637 billion $32 billion $268 billion $134 billion $94 billion $89 billion $114 billion $74 billionarrow_forward
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