A Bank Has Checking Deposits of $400, Saving Deposits of $900

question 193

Essay

A bank has checking deposits of $400, saving deposits of $900, time deposits of $900, loans of $950, government securities of $900, outstanding credit card balances of $400, currency in its vault of $40, and deposits in its reserv at the Fed of $40.
a) What is the amount of this bank's deposits that are in M1?
b) What is the amount of this bank's deposits that are in M2?
c) What is the amount of this bank's reserves?

---

Definitions:

Maturity Date

The date on which the principal and accrued interest on an investment or loan are due.

Compounded Monthly

A financial mechanism where interest earnings are recalculated each month, resulting in increased earnings over time due to the effect of compounding.

Withdrawals

The act of taking money out of an investment or bank account.

Fund Sustain

The capability to maintain financial resources at a certain level or to ensure the ongoing availability of funds.