Question 1

Assuming the table below are provided by Bank Negara Malaysia (Malaysia Central Bank). The table shows hypothetical values, in billions of Ringgit Malaysia in different forms of money.

		2019	2020	2021	2022
A	Currency	880	895	900	906
B	Money market mutual fund shares	680	685	683	692
C	Saving account deposits	5,500	5,780	5,968	6,105
D	Money market deposit accounts	1,214	1,245	1,274	1,329
E	Demand and checkable deposits	1,000	972	980	993
F	Small denomination time deposits	840	871	1,133	1,576
G	Travelers checks	5	5	4	3
H	3-month treasury bills	1,986	2,374	2,436	2,502

Required:

1. Determine the M1, M2 and M3 money supplies for each year. Estimate the growth rates of the M1 and M2 money supplies for 2020, 2021 and 2022.

(15 marks)

2. Discuss the possible reason of differences between growth rates of M1 and M3.

(5 marks)

3. Explain, TWO (2) advantages of M1 over M3 for small businesses and TWO (2) advantages of M3 over M1 for large companies like MNC.

(10 marks)

(Total 30 marks)