Need economics help with Question 6 about checkable diposits

Anonymous
timer Asked: Dec 10th, 2015
account_balance_wallet $5

Question Description

Tutor Answer

intel15
School: Carnegie Mellon University

Thank you for the opportunity to help you with your question!

In december 2004 checkable deposits owned by individuals and businesses were $667 billion

Money market funds and other deposits in decmeber 2004 were $ 713 billion

step by step calculation

a. M1 = currency held outside banks and traveler’s checks + checkable deposits owned by 

 individuals and business

given 

M1= $1372 billion

travellers checks in circulation = $8 billion

currency held by individuals and businesses = $697 billion

 checking deposits owned by individuals and business= x

So x= 1372-705(697+8) 

x= $667billion [ checkable deposits owned by individuals and businesses ]

b. 

 M2 = M1 + savings deposits + time deposits + money market mutual funds and other deposits. 

Given 

M2 = $6422 billion

M1= $1372 billion

time deposits = $817 billion

saving deposits = $3520 billion

Money market funds and other  deposits = y

y=M2-[M1+timedposits +saving deposits ]

y=  6422-[1372+817+3520]

y= 6422-(5709)

y=$713 billion

Please let me know if you need any clarification. I'm always happy to answer your questions.

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Review

Anonymous
awesome work thanks

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