Examkin

Soru

Zorluk: OrtaTypes and Supply of Money

In an economy, the Central Bank issues a total of N450 billion\text{N}450\text{ billion} in currency. Out of this amount, commercial banks hold N50 billion\text{N}50\text{ billion} as vault cash in their tills. If the demand deposits held by the public in commercial banks total N800 billion\text{N}800\text{ billion}, what is the value of the narrow money supply (M1M_1) in billions of Naira?

Cevap: 1200 billion Naira

Cevap

The value of the narrow money supply (M1M_1) is 1200 billion Naira.
The narrow money supply (M1M_1) consists of currency in circulation outside commercial banks plus demand deposits. Currency in circulation is found by subtracting vault cash from total currency issued by the central bank (N450 billion−N50 billion=N400 billion\text{N}450\text{ billion} - \text{N}50\text{ billion} = \text{N}400\text{ billion}). Adding demand deposits (N800 billion\text{N}800\text{ billion}) yields a total narrow money supply of N1200 billion\text{N}1200\text{ billion}.

Adım Adım Çözüm

1
Calculate currency in circulation outside commercial banks
400 billion Naira
Vault cash held inside commercial bank vaults is excluded from currency in circulation outside the banking system.
2
Calculate narrow money supply (M1M_1)
1200 billion Naira
Narrow money supply (M1M_1) is the sum of currency in circulation outside commercial banks and demand deposits.

Anahtar Kavram

Components and Calculation of Narrow Money Supply (M1M_1)
Bu soruyu puanla

Konular

Types and Supply of Money

Bu konudan daha fazla soru