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

question 289

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 reserve account 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:

Social Exchange

A theoretical framework that explains social relationships in terms of costs and benefits, where individuals seek to maximize rewards and minimize costs.

Obligated

Refers to being bound by a duty, contract, or sense of responsibility to perform a particular action or role.

Social Exchange Theory

A theoretical perspective, based on the principle of reinforcement, that assumes that people will likely choose actions that maximize rewards and minimize costs.

Exchange Network

A social structure that consists of individuals or entities sharing resources and services through a system of transactions.