Question 2

4. Money aggregates Identify whether each of the following examples belongs in M1 or M2. If an example belongs in both, be sure to check both boxes. Example M1 M2 Sean has a $10 bill in his wallet. O Cho has $8,000 in a two-year certificate of deposit (CD). O Bob has $25,000 in @ money market account. O Grade It Now Save & Continue 2. Liquidity Consider the relative liquidity of the following assets: Assets 1. The funds in a money market account 2. A $1 bill 3. A share in a publicly traded company 4. Your condo Select the assets in order of their liguidity, from most liquid to least liquid. Asset Most Liquid Second-Most Liquid Third-Most Liquid 4 [ [ Least Liquid 3. The kinds of money Suppose an extended period of political upheaval leads individuals to believe that the economy is heading toward a long recession. As a result, people will likely become more willing to accept W money in exchange for goods and services. U.S. dollars are an example of W money. Grade It Now Save & Continue 6. Required and excess reserves Suppose that Atlantic National Bank currently has $100,000 in demand deposits and $65,000 in outstanding loans. Assume the Federal Reserve has the reserve requirement set at 10%. Based on this information, complete the following table detailing Atlantic National Bank's reserves, required reserves, and excess reserves. Atlantic National Reserves Required Reserves Excess Reserves (Dollars) (Dollars) (Dollars) #? Grade It Now Save & Continue