To determine the levels of M1 and M2 money supply in the United States using the given table, follow these steps:
### Step A: Calculate the M1 Money Supply
The M1 money supply includes the most liquid forms of money, specifically:
1. Currency
2. Demand deposits
3. Other checkable deposits
4. Traveler's checks
Using the given values:
- Currency: \[tex]$79 billion
- Demand deposits: \$[/tex]78 billion
- Other checkable deposits: \[tex]$36 billion
- Traveler's checks: \$[/tex]4 billion
We sum these quantities to find the M1 money supply:
[tex]\[ M1 = \text{Currency} + \text{Demand deposits} + \text{Other checkable deposits} + \text{Traveler's checks} \][/tex]
[tex]\[ M1 = 79 + 78 + 36 + 4 \][/tex]
[tex]\[ M1 = 197 \][/tex]
Therefore, the M1 money supply is:
[tex]\[ \boxed{197} \text{ billion dollars} \][/tex]
### Step B: Calculate the M2 Money Supply
The M2 money supply includes all of M1 plus additional forms of money:
1. Savings deposits
2. Small time deposits
3. Money market funds
Using the given values for these additional assets:
- Savings deposits: \[tex]$451 billion
- Small time deposits: \$[/tex]21 billion
- Money market funds: \$43 billion
First, recall the M1 money supply we calculated:
[tex]\[ M1 = 197 \text{ billion dollars} \][/tex]
Add the other components to M1 to find the M2 money supply:
[tex]\[ M2 = M1 + \text{Savings deposits} + \text{Small time deposits} + \text{Money market funds} \][/tex]
[tex]\[ M2 = 197 + 451 + 21 + 43 \][/tex]
[tex]\[ M2 = 712 \][/tex]
Therefore, the M2 money supply is:
[tex]\[ \boxed{712} \text{ billion dollars} \][/tex]
