2. Using the following information determine the size of the demand de
QUESTION
2. Using the following information determine the size of the demand deposits component of the Ml money supply.Currency $350 millionTravelers checks $ 10 millionOther checkable deposits $200 millionSmall time deposits $ 100 millionMl money supply $800 million
M1 represents the narrow measure of money supply and includes only the currency, demand deposits and all near monies. Since it does not include short term or long term time deposits and other forms of financial instruments thus it is been considered as the narrow measure of money
supply as its horizon is limited. M1 = currency travellers checks demand deposits other checkable deposits800 = 350 10 demand deposits 200hence,demand deposits = 800 560 = $ 240million
ANSWER:
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