Compute currency in circulation as a percentage of m2.

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Reference no: EM1348986

The table below shows the United States components of M1 and M2 in billions of dollars for the month of December in the years 1998 to 2007 as published in the 2008 Economic report of the President.

Year Currency in circulation Traveler's checks Checkable deposits Money market funds Time deposits smaller than $100,000 Savings deposits M1

M2
Currency in circulation as a percentage of M1
Currency in circulation as a percentage of M2

1998 460.5 8.5 626.5 728.9 952.4 1,605.0
1999 517.8 8.6 596.2 819.7 956.8 1,740.3
2000 531.2 8.3 548.0 908.0 1,047.6 1,878.8
2001 581.2 8.0 592.6 962.3 976.5 2,312.8
2002 626.3 7.8 585.6 885.3 896.0 2,778.2
2003 662.5 7.7 635.9 777.4 818.7 3,169.1
2004 697.6 7.5 671.2 697.1 829.9 3,518.3
2005 723.9 7.2 643.4 699.9 995.8 3,621.4
2006 748.9 6.7 611.4 799.4 1,170.4 3,698.6
2007 759.0 6.3 599.2 976.1 1,216.8 3,889.8

For a., b., c., & d., you may insert a completed Excel spreadsheet with your answers, if you wish.
a. Complete the table by calculating M1,
b. Calculating M2,
c. Calculating currency in circulation as a percentage of M1, and
d. Compute currency in circulation as a percentage of M2.
e. Examining the following three charts and your completed table, what trends or patterns in:
- M1,
- M2,
- currency in circulation as a percentage of M1, and
- currency of circulation as a percentage of M2 do you see?

f. Illustrate what might account for these trends

Reference no: EM1348986

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