ECON102 Chapter Notes - Chapter 24: Nominal Interest Rate, Fractional-Reserve Banking, Real Interest Rate

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raspberryelephant299

18 Mar 2016

School

University of Waterloo

Department

Economics

Course

ECON102

Professor

Maryann Vaughan

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ECON102 Full Course Notes

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Two measures of the money stock for the canadian economy. Money consists of coins, bank notes and chequable deposits. M1 consists of currency held by individuals and businesses plus chequable deposits owned by individuals and businesses = currency (bank notes + coins) outside the banks + demand deposits located in chartered banks. Demanded deposits funds in accounts that can be removed without noice and usually pay litle to no interest. M2 consists of m1 plus all other deposits non-chequable deposits and ixed term deposits = m1 + personal savings deposits + non-personal noice deposits located in chartered banks (ex. Savings deposits bank deposits that typically earn a rate of return and require a sipulated amount of noice to be withdrawn, though rarely enforced (ex. You have to tell your bank a day in advance that you want cash from your savings account)

Related Questions

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

Category	Value
Federal Reserve Notes in circulation	$700
Money market mutual funds (MMMFs) held by individuals	400
Corporate bonds	300
Iron ore deposits	50
Currency in commercial banks	100
Savings deposits, including money market deposit accounts (MMDAs)	140
Checkable deposits	1,500
Small-denominated (less than $100,000) time deposits	100
Coins in circulation	40

a. What is M1 in Ironmania? $ million

b. What is M2 in Ironmania? $ million

coralbee549

The M1 measure of the money supply equals

a. paper money plus coins in circulation.

b. currency plus checking account balances.

c. currency plus checking account balances plus traveler's checks.

d. currency plus checking account balances plus traveler's checks plus savings account balances.

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QUESTION 21 2.5 points Save Answer The M1 measure of the money supply equals O paper money plus coins in circulation. O currency plus checking account balances. O currency plus checking account balances plus travelers checks. O currency plus checking account balances plus travelers checks plus savings account balances. QUESTION 22 2.5 points Save Answer If a person withdraws S500 from his/her savings account and puts it in his/her checking account, then M1 will_---and M2 will_- O increase; decrease O increase; not change O not change; increase O not change; decrease O not change; not change QUESTION 23 2.5 points Save Answer If the required reserve ratio is 10 percent, an increase in bank reserves of $1,000 can support an increase in checking account deposits in the banking system (including the original deposit) of up to $100. $1,000. $10,000. $100,000

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21. M1 includes currency(both paper and coin),checking accounts,traveler's checks(of non-bank issuers),demand deposits,other checkable deposits and negotiable order of withdrawl accounts(NOW). M1 doesview the full answer

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The M1 measure of the money supply equals paper money plus coins in circulation. currency plus checking account balances. currency plus checking account balances plus traveler's checks. currency plus checking account balances plus traveler's checks plus savings account balances.

turquoiseferret638

Question 9

In which of the following situations would money function as a store of value?

a. The wife checks the balance in the family savings account

b. In all of the above

c. The husband checks the prices at the local market

d. You take out a loan at the local bank

Question 10

M2 money is?

a. All demand deposits plus all currency and coin in circulations

b. M3 money plus all the currency and coin in the circulation

c. M1 plus near money

d. M3 plus near money

Question 11

Of all the parameters that influence effective demand, the most unstable overtime is?

a. Government Expenditure

b. Investment

c. Savings

d. Consumption

Question 12

People hold money?

a. to have money to take advantage of economic opportunities as they arise

b. to have money for purchases in between receipts of income

c. for all of the above purposes

d. to have money in case of unforseen emergencies

Question 13

The choice between near money and money is?

a. Near Money is not directly spendable, whereas money is directly spendable

b. Near money is fiat money, whereas money is not

c. None of the above

d. Near money consist of all deposits in commercial and saving banks, whereas money does not include deposits

Question 14

The largest single component in terms of total value in M1 money supply is?

Select one:

a. Coin

b. saving deposits

c. Demand deposits

d. Currency

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