Answer to Question #4533 in Finance for Ronnica Y

Question #4533
Following are components of the M1 money supply at the end of last year. What will be the size of the M1 money supply at the end of next year if currency grows by 10 percent, demand deposits grow by 5 percent, other checkable deposits grow by 8 percent, and the amount of traveler’s checks stays the same? Currency $700 billion Demand deposits $300 billion Other checkable deposits $300 billion Traveler’s checks $10 billion
Expert's answer
M1 = $700+$300+$300+$10 =$1310
M1next_year=$700*1,1+$300*1,05+$300*1,08+$10=$770+$315+$324+$10=$1419

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