The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the Tazian dollar. Aggregate banking statistics show that collectively the banks of Tazi hold $300 million of required reserves, $75 million of excess reserves, have issued $7,500 million of deposits, and hold $225 million of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank.

Refer to Scenario 29-1. Assuming the only other thing Tazian banks have on their balance sheets is loans, what is the value of existing loans made by Tazian banks?

A bank loans Kellie's Print Shop $350,000 to remodel a building near campus to use as a new store. On their respective balance sheets, this loan is

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold

Suppose that monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate increases

Type of Money Amount (Billions of dollars)

Large time deposits     120

Small time deposits         80

Demand deposits           300

Other checkable deposits            50

Savings deposits                                 65

Traveler's checks                                   5

Money market mutual funds    200

Currency                                               150

Credit card balances                       300

Miscellaneous categories of M2   30

What is the M1 and M2?