. Outline the various components of the U.S. money supply as it exists today

Expert Solution

Money Supply means the total of monetary assets available in the economy. It includes mostly the currency in circulation and demand deposits. It measures the liquidity in the economy.

The various components of the US money supply are as follows:

M0: It includes the total of all the physical currencies that is Federal Reserve Notes, US notes and coins. It is also known as high-powered money and act as a base for the economy.

MB: Monetary Base is a total of physical currencies in circulation plus Bank deposits held with the Federal Reserve.

M1: It includes the highly liquid assets that can be easily convertible into cash. It involves the total of M0 plus demand deposits, traveler checks and other checkable deposits.

M2: M2 includes the total of M1 plus "near money". Near money includes saving deposits, money market securities, mutual funds and other time deposits.

MZM: "Money Zero Maturity" includes the total of M2 supply less time deposits plus money market funds. Time deposit is not included in MZM as it is not redeemable at par.

M3: M3 includes M2 plus large time deposits, institutional money market mutual funds, repurchase agreements and deposits of eurodollars. M3 are less liquid in nature.

M4: It includes M3 plus commercial papers and T-bills.

L: L includes M4 plus Banker's Acceptance. It represents the measurement of total Liquidity.

jeff jeffy answered 11 months ago

identify a social inequality that exists in the U.S. today, need to bring awareness and promote...

identify a social inequality that exists in the U.S. today, need to bring awareness and promote action to fight that inequalty in their community. need to address inequalites in economics and work, law and justice, or health and illness

Outline the steps between an increase in the money supply and an increase in equilibrium output

Describe what capital structure means and explain its different components. In your answer outline the various...

Describe what capital structure means and explain its different components. In your answer outline the various types of debt and equity and what distinguishes them. answer in 500- 700 words

COVID 19 has impacted the entire U.S. economy. How was money demand and money supply affected?

What are the main components of money supply? (b) How can the Bank of Ghana use...

What are the main components of money supply? (b) How can the Bank of Ghana use its prime rate, open market operations and the required reserve ratio to control money supply? c). State and briefly explain the main objectives of monetary policy? d) What is the relation between the required reserve ratio and the money multiplier?

13. Suppose the Federal Reserve increases the U.S. money supply in an effort to prevent the...

13. Suppose the Federal Reserve increases the U.S. money supply in an effort to prevent the U.S. economy from slipping further into recession. a. According to the Quantity Theory of Money, what will the increased money supply do to the price of goods in the United States in the long run, all else equal? b. According the theory of PPP, what will happen to the exchange value of the U.S. dollar as a result, all else equal? In particular, would...

Author Anna Schwartz writes this about money: “The U.S. money supply comprises currency—dollar bills and coins...

Author Anna Schwartz writes this about money: “The U.S. money supply comprises currency—dollar bills and coins issued by the Federal Reserve System and the Treasury—and various kinds of deposits held by the public at commercial banks and other depository institutions such as savings and loans and credit unions.” (Schwartz, n.d) In this threaded discussion, complete the following: 1) Discuss the concept of money. First, define the functions of money and explain how currency meets these functions. 2) Historically, a number...

What are the various ways in which the Federal Reserve can influence the money supply? Please...

What are the various ways in which the Federal Reserve can influence the money supply? Please read the Fed and money supply lecture

The money supply for the United States is approximately $15 trillion. What value of U.S. Treasury...

The money supply for the United States is approximately $15 trillion. What value of U.S. Treasury debt should the Fed buy or sell in order to reduce the money supply by 5% if the reserve ratio is 10%? Report an open market purchase as a positive number, an open market sale as a negative number, and round to the nearest whole billion dollars.

1. Describe the various factors that determine the money supply. 2. In your opinion, what should...

1. Describe the various factors that determine the money supply. 2. In your opinion, what should the Federal Reserve do with the money supply to deal with the coronavirus crisis.

Question