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?

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Definitions:

Asymmetric Information

A situation in which one party in a transaction has more or superior information compared to the other.

Informational Asymmetry

A situation where one party in a transaction has more or better information compared to another, potentially leading to an imbalance in power or unfair transactions.

Relevant Knowledge

Information or understanding that is directly applicable and beneficial to a particular situation or subject.

Adverse Selection

A situation where sellers have information that buyers do not have, or vice versa, about some aspect of product quality.