ECN 204 Chapter 14: Chapter 14 ECN 204
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8 Feb 2017
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Medium of exchange: items seller generally accept and buyers generally use to pay for a good or service. Measure of value: measures value of money. Stores of value: able to use in stores to buy good/services. Liquidity: the ease with which an asset can be converted to cash with little or no loss of purchasing power. Currency: coins and paper money: token money, bank of canada notes. Demand deposits: chequing account deposits in chartered banks: money m1+= currency in circulation + demand deposits. M2: deposits at trust and mortgage loan companies, deposits at caisses populaires, credit unions and other non-bank deposit taking institutions money market mutual funds. M2+: m2++ is m2 plus canadian saving bonds and non-money market mutual funds. In canada all money consists essentially of the debts of the government and charted banks. These debts efficiently perform the functions of money so long as their value, or purchasing power, is relatively stable.
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INTRO - MACROECONOMICS - Money & Banking - & The Money Market and Monetary Policy
Answer the questions below from the data in the table (all figures are in billions of dollars).
Total currency issued by the Bank of Canada | $17 |
Total personal savings deposits | 186 |
Total demand deposits | 19 |
Deposits of government at the Bank of Canada | 3 |
Currency held by commercial banks | 3 |
Government bonds owned by the public | 96 |
Nonpersonal term deposits (certificates of deposit) | 41 |
a. Total currency in circulation is $ _____ billion.
b. How much larger is M1 than the total currency in circulation?
M1 is larger than the total currency by $ _____ billion.
c. How much larger is M2 than M1?
M2 is larger than M1 by $ _____ billion.
Please provide an explanation as you solve this question.
d. How much larger is M3 than M2?
M3 is larger than M2 by $ _____billion.