Question

QUESTION 19

1. In January 2019, currency was $500 billion, traveler's checks were $10 billion; checkable deposits owned by individuals and businesses were $800 billion, saving deposits were $2,500 billion, time deposits were $1,900 billion; and money market funds were $1,800 billion.

   What was M1? $ billion.

   What was M2? $ billion.

4 points   

QUESTION 20

1. If you deposit $1,000 in cash in your checkable deposit at your bank, the quantity of M1 immediately

   		does not change in size.
   		increases by $1,000.
   		increases by $2,000.
   		decreases by $1,000.

2 points   

QUESTION 21

1. Which of the following is an asset for a bank?

   		shareholders' equity
   		loans
   		short-term borrowing
   		deposits of its customers

Answer 1

Q19. M1 is $ 510 billion

Sl.No	M1 Supply	$ billion
1	Currency	500
2	Travelers Check	10
	Total	510

M2 is $ 7510 billion

Sl.No	M2 Supply	$ billion
1	M1	510
2	Checkable deposits	800
3	Saving deposits	2500
4	Time deposits	1900
5	Money market funds	1800
	Total	7510

Q20. Option 1

As M1 does not includes checkable deposits

Q21. Option 2

Loans are owed by borrowers to banks hence are considered as assets