Question

Please answer in detail with every step along with the graph which is required for question bit C.

The table below shows hypothetical values, in billions of dollars, of different forms of money.

a.     Use the table to calculate the M1 and M2 money supplies for each year, as well as the growth rates of the M1 and M2 money supplies from the previous year.

b.     Why are the growth rates of M1 and M2 so different? Explain.

		2015	2016	2017	2018
A.	Currency	900	920	925	931
B.	Money market mutual fund shares	680	681	679	688
C.	Saving account deposits	5,500	5,780	5,968	6,105
D.	Money market deposit accounts	1,214	1,245	1,274	1,329
E.	Demand and checkable deposits	1,000	972	980	993
F.	Small denomination time deposits	830	861	1,123	1,566
G.	Traveler’s checks	4	4	3	2
H.	3-month treasury bills	1,986	2,374	2,436	2,502

c. Go to the web site of the St. Louis Federal Reserve Bank FRED database and graph the (year-over-year) growth rates of M1 and M2 for the sample period 1998-2018. Show your graph in your submission.

Answer 1