Answered: Suppose the country X has the following…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q.1. Suppose the country X has the following monetary asset information as of year 2010:

Cash in hands of the public = $300b (where ‘b’ represents billion)

Demand Deposits (DD) = $400b

Other Checkable Deposits = $150b

Traveler’s checks = $50b

Savings Type accounts = $2000b

Money Market Mutual Funds (MMMF) = $1000b

Small Time Deposits = $500b

Large Time Deposits = $450b

(a) Calculate M1 for Country X

(b) Calculate M2 for Country X

(c) Which item is not included in the calculations of M1 and M2?

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

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