Money, money supply and financial aggregates PDF

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Money, money supply and financial aggregates...

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Preliminary Economics Money, money supply and financial aggregates 1. Identify the motive for holding funds in each of the following scenarios

(a) A student buys a new laptop so they can do more research at home

transactional

(b) A farmer expects Qantas shares to fall sharply next week

Speculative

(c) A ski instructor is worried he might lose his job during the summer

Precautionary

2. Write the correct aggregate name next to its definition

(a) All currency + all deposits banks

M3

(b) All currency + all deposits with banks and NBFIs – NBFI deposits in banks

Broad money banks

(c) All currency + t transactional deposits in banks

M1

3. Use the information in the following table to calculate the aggregates below Currency

$100

Deposits in transactional bank accounts

$500

Other deposits with banks

$800

Net NBFI deposits

$600



Broad money

2000



M3

1400



M1

600

4. Use the information in the following table to calculate the aggregates below Currency

$300

Deposits in transactional bank accounts

$800

Other deposits with banks

$1,000

Deposits in NBFI

$600

NBFI deposits in banks

$200



Broad money

2500



M3

2100



M1

1100

5. Use the information in the following table to calculate the aggregates below Currency

$200

All deposits in banks

$1,500

Deposits in NBFI

$800

NBFI deposits in banks

$400



Broad money

2100



M3

1700

6. Indicate whether the following statements are true or false 

Secondary markets can reduce the need to individuals to hold savings as cash

true



Money supply includes all the funds that have the key characteristics of money

true



If individuals feel that they will make a capital loss on financial assets they reduce their holdings of cash

false...