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17 May, 16:09

Given the following information, what are the values of M1 and M2? Small time deposits $650 billion Demand deposits and other checkable deposits $300 billion Savings deposits $750 billion Money market mutual funds $600 billion Traveler's checks $25 billion Large time deposits $600 billion Currency $100 billion Miscellaneous categories in M2 $25 billion

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  1. 17 May, 16:28
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    Answer: The answer is as follows:

    Explanation:

    M1 is more liquefied than the M2.

    M1 consists of:

    Demand deposits and other checkable deposits + Traveler's checks + Currency

    = 300 + 25 + 100

    = $425 billion

    In M2, M1 is also a part of M2.

    M2 consists of:

    M1 + Small time deposits + Savings deposits + Large time deposits + Miscellaneous categories

    425 + $650 + $750 + $600 + 25

    = $2450 Billion
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