Use the following table to determine the levels of M1 and M2 in the United States. Money Categories In the United States Amount (billions of Asset dollars) oints Currency $78 Demand deposits 77 Money market funds 43 Other checkable deposits 36 Savings deposits 148 eBook Small time deposits 21 Traveler's checks 3 References Instructions: Enter your answers as a whole number. a. Calculate the M1 money supply. billion b. Calculate the M2 money supply. billion2 Suppose that Karen deposits $500 into her checking account at the bank. The reserve requirement for Karen's bank is 7%. Assume the bank does not want to hold any excess reserves of new deposits. a. Use this Information to complete the balance sheet below to show how the bank's assets and liabilities change when Karen deposits the $500. Instructions: Enter your answers as a whole number. oints A Simple Bank Balance Sheet Assets Liabilities eBook Change in Reserves: $ Change in Deposits: $ Change in Loans: $ b. Why are deposits considered liabilities for a bank? References O The bank must hold deposits as reserves at the Federal Reserve. O The bank must pay interest on deposits. O Deposits can be withdrawn at any time. O Deposits can be loaned out by the bank.3 Suppose the Federal Reserve Increases the amount of reserves by $100 million and the total money supply Increases by $600 million. Instructions: Enter your answers as a whole number. a. What is the money multiplier? 5 points b. Using the money multiplier from part a, how much will the money supply change If the Federal Reserve increases reserves by $60 million? eBook million References4 When a consumer wants to compare the price of one product with another, money is primarily functioning as a 5 Multiple Choice points eBook O store of value. References O unit of account. O checkable deposit. O medium of exchange.5 Money functions as a store of value if it allows you to Multiple Choice 5 points O measure the value of goods In a reliable way. eBook References O make exchanges In a more efficient manner. O delay purchases until you want the goods. O Increase your confidence In money.6 Money supply M1 does not include the currency held by Multiple Choice pints O households in their wallets or purses. eBook References O business firms. O commercial banks. O state and local governments.Assets of the commercial banking system include Multiple Choice oints O loans and deposits. eBook References O reserves and deposits. O deposits. O reserves and loans.8 What is one significant characteristic of fractional reserve banking? Multiple Choice 5 points O Banks hold a fraction of their loans In reserve. eBook References O Banks use deposit insurance for loans to customers. O Bank loans will be equal to the amount of gold on deposit. O Banks can create money through lending their reserves.9 A wealthy executive is holding money, waiting for a good time to invest in the stock market. This action would be an example of the 5 Multiple Choice points Book O transactions demand for money. References O asset demand for money. O creation of fiat money. O use of money as a medium of exchange.An Increase in nominal GDP will 10 Multiple Choice 5 points O Increase the transactions demand and the total demand for money. eBook References O decrease the transactions demand and the total demand for money. O Increase the transactions demand for money but decrease the total demand for money. O decrease the transactions demand for money but Increase the total demand for money.11 Suppose the Federal Reserve buys bonds from the banking system, the money supply curve Multiple Choice 5 points O will become steeper. eBook References O will become flatter. O shift to the right. O shift to the left.Use the following diagram of the market for money to answer the next question. 12 Sm points Interest Rate eBook Dm O Q References Quantity of Money The equilibrium Interest rate Is Multiple Choice O O 12 O 13 O not determinable without additional Information.13 Use the following table to answer the next question. Interest Transaction Demand Asset Demand Money Rate for Money for Money Supply 2% $220 $300 $460 points 4 226 280 460 6 226 260 460 8 220 240 460 10 220 20 460 eBook The equilibrium Interest rate Is References Multiple Choice O 2 percent O 4 percent. O 6 percent O 8 percent.Use the following graph to answer the next question. 14 A points UT C Interest Rate (percent) Book W D N References E 1 $50 100 150 200 250 300 Money If the Initial equilibrium Interest rate was 5 percent and the money supply increased by $100 billion, then the new Interest rate would be Multiple Choice O 1 percent . O 2 percent. O 3 percent. O 4 percent.15 Use the following table to answer the next question. Interest Demand for Money Rate (billions) $200 5 points 6 300 5 400 4 500 Book If the current Interest rate is 5 percent, what will be the equilibrium Interest rate if the money supply falls by $100 billion dollars? References Multiple Choice O 7 percent O 6 percent O 4 percent O 5 percent