Assume that the following asset values (in millions of dollars) exist in Ironman

Question

Assume that the following asset values (in millions of dollars) exist in Ironmania Value Category $700 400 300 Federal Reserve notes in circulation Money market mutual funds (MMMFs) held by individuals Corporate bonds Iron ore doposits Currency in commercial banks Savings deposits, including money market deposit accounts (MMDAs) Checkable deposits Small-denominated (less than $100.000) time deposits Coins in circulation 50 100 140 1500 100 40 a. what is MI in ironmania? b. What is M2 in Ironmania?

Explanation / Answer

M1 = Federal Reserve Notes in circulation + checkable deposits+ coins in circulation.

= 700 + 1500 + 40

=$2240

M2 = M1+ Market Mutual fund+ Saving deposits + Time deposits

= 2240 + 400+140+100

= $2880

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