Monetary Policy (Chapters 13-15)

Part I: The following amounts of different forms of (what could be considered) money are circulating in the "slightly more complicated" circular flow (i.e., the economy). Use the numbers to calculate M1 and M2, show your work by listing what is included in each.

Checking Deposits = $1,000; Coins = $10; Federal Reserve Notes = $900

Foreign Currency = $80; Money Market Funds = $1,000;

Mortgage Securities = $2,000; Savings Deposits = $19,000;

Time Deposits (large) = $200; Time Deposits (small) = $500;

Traveler's Checks = $40; Treasury Securities = $6,000

M1 =

M2 =