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Laabri

Understanding and Calculating Different Levels of Money

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Last updated over 1 year ago
6 Nsɛmmisa
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Put your answers in the following format. ($#,###)

NOTE: Non checkable savings deposits are deemed NOT liquid savings.

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Key Terms!

  • The monetary base, also known as "high-powered money" or "base money," consists of currency in circulation and reserves held by commercial banks at the central bank. The monetary base includes physical currency (coins and paper money) in the hands of the public and commercial bank reserves (both required and excess) held at the central bank.

  • The money supply consists of

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1.
  • Reserves

  • Checkable Deposits

  • Currency in Circulation

  • Monetary Base (MB)

  • M0 Supply (Sm)

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2.

Match the following for levels of money

Draggable itemarrow_right_altCorresponding Item

M1 Level of Money plus savings accounts plus short-time deposits plus mutual funds

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M0 Level of Money

Currency and Coin in Circulation

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MB

Currency in Circulation and Bank Reserves

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M1 Level of Money

M0 Level of Money plus Checkable Deposits

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M2 Level of Money

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3.

Complete the table for the levels of money

M0

M1

M2

Medium of Exchange

Store of Value

Most Narrow Form of Money

Near Money

Most Liquid

Least Liquid

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4.

If the bank reserves are $1000, then what is the monetary base?

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5.

What is the M0 money supply?

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6.

What is the M1 money supply?