2. (30 points) a. According to the table below, what is the value of M2? Please

Question

2. (30 points) a. According to the table below, what is the value of M2? Please show your work. Currency held by public SSO0B Small Time deposits = $800B Checkable Deposits- $500B Money Market Mutual Funds Liquid Equity shares $900B Travelers' Checks S10B $800B Treasury Bills- $800B Money Market deposit Accounts $1200B Liquid Bonds-$900 b If the reserve requirement is 8% on deposits and banks hold 3% as excess reserves, what is the money multiplier? Please show your work. . What ultimately determines the value of the dollar? Please explain.

Explanation / Answer

M1 = Currency (bills and coins in circulation) + Demand deposits + traveler’s
checks
= $ 500+ $500 + $10= $1010billion
M2 = M1 + Small time deposits + Money market mutual funds
= $1010 + $800 + $800
= $2610 billion

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