Consider the following data: currency (held outside banks) = $354 billion, check

Question

Consider the following data: currency (held outside banks) = $354 billion, checkable deposits = $250 billion, traveler's checks = $4 billion, small-denomination time deposits = $200 billion, savings deposits = $100 billion, retail money market mutual funds = $160 billion. M1 equals billion and M2 equals billion. Bank deposits at the Federal Reserve = $40 billion, vault cash = $2 billion, the required reserve ratio = 0.10, and total checkable deposits = $400 billion. It follows that required reserves equal billion, (total) reserves equal billion and excess reserves equal billion.

Explanation / Answer

M1=currecny+demand deposit+traveller's check

=354+50+4

M1=$608

M2=M1+saving depostis+time deposits+ money market mutual funds

=608+200+100+160

M2=$1068

b)

required reserves= $40 billion, (total) reserves= $42 billion and excess reserves=400-42=$358 billion

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