Answer to Question #32990 in Economics of Enterprise for Mfreyjackson

Question

. Determine the size of the demand deposits component of the M1 money supply using the following information.
Currency $350 million
Traveler’s checks $10 million
Other checkable deposits $200 million
Small time deposits $100 million
M1 money supply $800 million

Answer 1

М1 includes the following components:
1) Notes and coins in circulation (outside Federal Reserve Banks and the vaults
of depository institutions) (currency)
2) Traveler's checks of non-bank issuers
3) Demand deposits
4) Other checkable deposits (OCDs), which consist primarily of Negotiable Order
of Withdrawal (NOW) accounts at depository institutions and credit union share
draft accounts.
So, the size of the demand deposit component of the M1 = 800 - 100 - 200 - 350 - 10 =
$140 million.