21 - more stable ← ← The balance sheet of a bank must...

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Econ 102 21/02/2008 09:10:00 Measuring the supply of money in the United States M1, or transactions money is money that can be directly used for Liquid transaction Checks, currency, deposit M2 or Broad money, included near monies, or close substitutes for transactions  money. Bond=M2 Check=M1 M2=M1 +savings accounts + money market accounts + other near monies The main advantage of looking at M2 instead of M1 is that M2 is sometimes 
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Unformatted text preview: more stable. ← ← The balance sheet of a bank must always balance, so that the sum of assets (reserves and loans) equals the sum of liabilities (deposits and net worth). • Reserves – 20 o Deposits – 100 • Loans – 90 o Net worth – 10 • Total – 110 o Total – 110 ← Double entry book keeping ← ← ← 21/02/2008 09:10:00 ← 21/02/2008 09:10:00 ←...
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