The Central Bank of a small country reports

Question

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Bank deposits and M1, M2

The Central Bank of a small country reports the following data

Accounts                                                                               Billions of local currency

Small time deposits                                                                                       1260

Money market mutual funds held by businesses                                           1290

Savings deposits                                                                                              250

Money market deposits accounts                                                                   1500

Checkable deposits                                                                                           896

Currency in circulation                                                                                       340

Market value of stock market                                                                           1000

a. What is the value of M1? b. What is the value of M2? c. What will be the value of M1 100 units of currency are removed from the savings deposits and are held as cash? d. In this case, what will be the value of M2?

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