Money -- Applications

A. Find historical data for M1 and M2 at the Federal Reserve at www.federalreserve.gov/releases/h6/about.htm.
1. During this past year, which measure of the money supply has increased the most? The least? Can you think of an explanation for the difference?

B. Log on to www.federalreserve.gov/releases/h3/about.htm and access the latest release.
1. What is the latest level of required reserves?
2. Are banks keeping excess reserves?

C. Identify things that have been used as money at different times and in different societies. Explain why some things can be used effectively for money and some things cannot.

D. Demonstrate how successive deposits and loans by commercial banks, resulting from one new deposit in the banking system, cause the money supply to expand and how repayment of loans caused the money supply to contract.