Purchase Solution

Calculating reserves, monetary base, and M2

Not what you're looking for?

Ask Custom Question

Given a central bank has gold, foreign exchange, banks' deposits, gov't securities and currency in circulation and the banks had checkable deposits, savings deposits/time deposits, and currency inside the banks which of the above who I use to calculate

a Banks' reserves
The Monetary Base
M2

Purchase this Solution
Solution Summary

Monetary Base is defined.

Solution Preview

Banks' reserves = bank deposits at the Fed + currency held in bank = currency inside the banks (in this case)

Monetary Base is the total of currency held by the non-bank public, vault cash held by banks, and Federal Reserve deposits of the banks. This contains the ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Trends in Currency Circulation

    Complete the table by calculating M1, M2, currency in circulation as a percentage of M1, and currency in circulation as a percentage of M2.

  • Role of Central Bank

    The level of money stock is the product of two components: the monetary multiplier and the monetary base. The monetary base is the quantity of government-produced money. It consists of currency held by the public and total reserves held by banks.

  • Money Multiplier & Currency holdings

    The monetary aggregate can signify either narrow money, M1 or broad money, M2 while MB is the reserves of the commercial banks kept with the central bank and currency held with the public.

  • Economic Systems Questions

    The federal budget will often show a surplus as the tax base increases. The terms M1, M2, M3 refer to the monetary aggregates.

  • Monetary policy multiple choice

    The monetary base includes: D) currency and cash plus commercial bank deposits at the Fed.

  • Effects of newly printed currency

    The sudden increase in M1 caused a sudden increase in the monetary base, which includes M1 and bank reserves. See http://www.federalreserve.gov/releases/h3/20081023/. This means that the funds the Fed paid to banks are simply sitting in the vault.

  • Federal Tax Revenues

    Time deposits are a part of M1 but not M2. M1 is a larger dollar figure than M2. Required reserves are the amount of_________________.

  • US Economy Function and Regulation

    M2 = M1 + all near moneys. In the real world, money supply has different definitions: M1 and M2. Money is categorized according to its liquidity. The most liquid items are in M1. 3.

  • Multiple choice

    b. a component of M2, but not M1. c. a component of M3, but not M2 or M1. d. not a component of M1, M2, or M3. 18. The reserves of a commercial bank consist of: a. the amount of money market funds it holds.

View More Related Solutions