Use the following information to answer questions 1 and 2: Consider the following statistics for the banking sector in Canada displayed in the table below (all numbers in billions of domestic currency)

Economics Dec 06, 2020

Use the following information to answer questions 1 and 2:

Consider the following statistics for the banking sector in Canada displayed in the table below (all numbers in billions of domestic currency). Category

Amount (in billions of domestic currency)

Coins and Currency in Circulation 1100

Checkable Deposits 1

Traveler's Checks 1500

Savings Accounts 8200

Money Market Mutual Funds 1

Time Deposits 800

1) Using the data above, calculate M1 for Canada.

2) Using the data above, calculate M2 for Canada.

Expert Solution

1) Computation of the M1 for Canada:-

M1 = Currency in circulation + Checkable deposits + Travelers check

= 1,100 + 1 + 1,500

= $2,601 billion

?2) Computation of the M2 for Canada:-

M2 = M1 + Saving deposits + Money market mutual funds + Time deposits

= 2,601 + 8,200 + 1 + 800

= $11,602 billion

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