QUESTION 3 Use the following ihrmation to calculate M1, and MJ. Time deposs 5100

Question

QUESTION 3 Use the following ihrmation to calculate M1, and MJ. Time deposs 5100K Time deposits $100K or less Currency & coin- $560 B $290 B 5830 B 5 50 B $700B $450 B Travaler's checks Money market fund depoda Savings depesits Checking account deposits 680 B QUESTION 4 Suppose that a bank has $6,000 in checkable deposits and the required reserve ratio is 02. If O a 54,000 and the required reserve ratio is02. If the bank wishes to hold no excess reserves, its actual reserves wil be b S1200 less than S1.000 o d None of the above

Explanation / Answer

M1= currency + travel checks + checking account deposit

M1=830+50+680

=$1,560 B

M2=M1+ small time deposit + saving deposit + money market fund deposit

=1560+290+450+700

=$3000 B

M3= M2+ large time deposit

=$3000 B +560

=$3560 B

4.

The checkable deposit = 6000

reserve requirement =0.20

since there is no excess reserve therefore actual reserve will be= 0.20* 6000

=$1200

Hence option b is the correct answer.

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