ECON 1102 Chapter Notes - Chapter 14: Balance Sheet, Credit Union, Excess Reserves

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4 Apr 2016

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Liquidity: the ease with which an asset can be converted to cash with little or no loss of purchasing power. Chartered banks are the primary depository institutions. Near monies are highly liquid nancial assets that do not directly function as a medium of exchange but can be readily converted into currency. E. g. currency or funds in non quenchable savings accounts. Term deposits become available to a depositor only at maturity. Deposits at trust and mortgage loan companies. Deposits at causes populaires, credit unions, and other non-bank deposit taking institutions. Canadian savings bonds and non-money market mutual funds. If the price level is 1. 0, then the value of the dollar is 1. If the price level rises to 1. 2, d falls to 0. 833. A 20% increase in the price level reduces the value of the dollar by 16. 67% A multi-branched, privately owned, chartered nancial intermediary that has received a charter by act of parliament.

Related Questions

With explanations and work please!

Suppose the Federal Reserve buys 100 of mortgage-backed securities in the open market. What effect will this open market operation have on demand deposits and M1? Show all work.

Assume the required reserve ratio is 10% and the currency drain is 40%. Ignore all other complications. Thanks!

M1:

What is 'M1'

M1 is a metric for the money supply of a country and includes physical money â both paper and coin â as well as checking accounts, demand deposits and negotiable order of withdrawal (NOW) accounts. The most liquid portions of the money supply are measured by M1 because it contains currency and assets that can be converted to cash quickly. "Near money" and "near, near money," which fall under M2 and M3, cannot be converted to currency as quickly.

M1= Currency + Demand Deposits

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.

ultramarinehornet16

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

salmonyak756

ECON 1102 Chapter Notes - Chapter 14: Balance Sheet, Credit Union, Excess Reserves

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