show work.

Part 1.

Considering the following data (expressed in billions of U.S. dollars), calculate Ml and M2.

Currency

1,050

Savings deposits

5,500

Small-denomination time deposits

1,000

Traveler's checks outside banks and thrifts

10

Total money market mutual funds

800

Institution-only money market mutual funds

1,800

Transactions deposits

1,140

Part 2.

Identify whether each of the following amounts is counted in Ml only, M2 only, both Ml and M2, or neither.

1. $50 billion in U.S. Treasury bills
2. $15 billion in small-denomination time deposits
3. $5 billion in traveler's checks not issued by a bank
4. $20 billion in money market deposit accounts

Part 3.

Identify whether each of the following events poses an adverse selection problem or a moral hazard problem in financial markets.2 Pts

1. A loan applicant does not mention that a legal judgment in his divorce case will require him to make alimony payments to his ex-wife.
2. An individual who was recently approved for a loan to start a new business decides to use some of the funds to take a Hawaiian vacation.

Part 4.

Draw an empty bank balance sheet, with the heading "Assets" on the left and the heading "Liabilities" on the right. Then place the following items on the proper side of the balance sheet:

1. Loans to a private company
2. Borrowings from a Federal Reserve district bank
3. Vault cash
4. Transactions deposits

Part: 5

Below, you are provided with statements related to the four different functions of money. You will identify which function of money is being described in eachstatement.

1: Complete the statement below.

Jason earned $400 per month as a server when he was in high

school and saved of this income each month. Today, three years

later, Jason uses this money to buy his books at the University of

Pennsylvania. This statement refers to money's function as a(n)

____________________________ (medium of exchange, unit of account,

store of value, standard of deferred payment).

2: Complete the statement below.

Sally produces knitted mittens, and Jess produces orange juice. With

money, Sally can purchase some of Jess's orange juice without Jess

wanting any mittens. This statement refers to money's function as

a(n) ____________________________ (medium of exchange, unit of

account, store of value, standard of deferred payment).

3: Complete the statement below.

Terry buys a car for $15,000. He is able to take out a loan and make

specified payments in the future. This statement refers to money's

function as a(n) ____________________________ (medium of exchange,

unit of account, store of value, standard of deferred payment).

4: Complete the statement below.

Eduardo makes peanut butter, but wants to buy eggs. Jeff makes

jelly, but wants to buy eggs. With money, we do not need two prices

for eggs, one in jars of peanut butter and another in jars of jelly.

This statement refers to money's function as a(n)

____________________________ (medium of exchange, unit of account,

store of value, standard of deferred payment)

• Part 6

Issues & Applications: Why U.S. Taxpayers Are Last-Resort Funders of Much of the Financial Industry.

6. Even though the federal government requires depository institutions to contribute premiums to the FDIC, who ultimately has to provide sufficient funds if the FDIC runs out of cash?(Hint: The FDIC borrowed funds from the U.S. Treasury in 1991 and 2009.)

part 7

1. What does it mean for international trade to be friction-less?
2. Why is it beneficial for international trade to be frictionless?
3. What are some ways countries can impede trade?