Question

Question 1:
Use the following information about the economy of Guyana in February 2020 to answer the below question (NOTE - values are in Guyanese dollars):

Deposits in checking accounts - $133 billion
Deposits in savings accounts - $210 billion
Deposits in other, illiquid accounts - $112 billion
Small time deposits - $9 billion
Currency - $116 billion
Bank reserves - $92 billion

What is the value of M2 in Guyana for February 2020?

(Answers should be in the form "Z billion". Just enter "Z".)

Question 2:
Use the following information about the economy of Guyana in 2018 to answer the below question (NOTE - values are in Guyanese dollars):

2018 GDP - $689 billion

2018 Taxes - $117 billion
2018 Investment - $345 billion
2018 Government Spending - $144 billion
2018 Consumption - $454 billion

What was the value of net capital inflow in 2018? (You can assume no transfer payments.)

(Answers should be in the form "Z billion." Just enter "Z.")

Answer 1

Answer:-

Q-1 :-

Money supply is measured by M2. where M1 is component of M2. so first of all we should find M1. and On the basis of M1 we find total value of M2.

* M1 = currency + deposit in checking account

= $133 Z+ $116 Z

= $249 Z

* M2 = M1 + deposit in saving account + deposit in other liquid account + small time deposit

= $249Z + $210 Z +$112 Z + $9 Z

= $580 Z

so total value of M2 is $580 Z

Q-2 :- net capital inflows is the net amount of foreign investment in country.

we find out net capital inflows by equation of GDP:-

GDP = INVESTMENT + CONSUMPTION + GOVERNMENT SPENDING + EXPORT- IMPORTANT

Y = C+I+G +( EX-IM)

$689Z = $454Z+ $345Z+ $144Z - (X-M)

NET EXPORT = $689Z -$454Z - $345Z-$144Z

NET EXPORT = -$254Z

here, net export is negative so it's called net import.

NET CAPITAL INFLOWS = NET IMPORT

so here net capital inflows is $254Z