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NCIAL SECTOR - 9.1.6 Money Homework THE CHANGING MONEY SUPPLY The table below lists the components of MI and M2 in the U.S. between 2005

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NCIAL SECTOR - 9.1.6 Money Homework THE CHANGING MONEY SUPPLY The table below lists the components of MI and M2 in the U.S. between 2005 and 2012. Use the data included in this table to complete the following questions. (All values are listed in billions of U.S. dollars.) MI MI M Z M2 M Z Currency Year Checkable Bank raveler's Money Time Currency Circulation Checks Deposits Market Deposits as a % of MI as a Deposits % of M2 Funds 2005 710 655 7.4 3,539 672 919 1, 372. 4 5, 130 2006 740 628 6.9 3,631 723 1, 1 12 1, 374. 9 5, 464) 2007 757 610 6.5 3,798 847 1,250 1 373.5/ 5, 895 2008 776 652 5.9 4,003 1,002 1,325 1433 . 9/ 6 , 330 2009 852 781 5.2 4,506 908 1,333 1438- 2/6, 747 2010 888 848 4.8 5,094 711 1,045 ,740.8 6 , 850 2011 963 1,038 4.5 5,705 664 837 2 , 005.5/ 7, 206 2012 1,050 1,255 6,364 635 695 2 , 309 7 , 694 I) Calculate the MI money supply and record the numbers in the proper column. 2) Calculate the M2 money supply and record the numbers in the proper column. 3 ) What percentage of MI was held as Currency in Circulation each year? Write these values in the table. 4 ) The amount of Currency in Circulation has grown significantly since 2005. The percentage of MI held as Currency in Circulation, however, has decreased dramatically. Why do you think this is the case? What percentage of M2 was held as MI each year? Write these values in the final column on the table. The United States officially suffered a recession from 2007 to 2009. Refer to the "MI as a % of M2" column to answer these questions. a) What happened to the MI and M2 money supplies during this recession? b) Why do you think this happened

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