Consider intertemporal production economy with money

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Consider the intertemporal production economy with money of Chapter 12( WIllamson). the government decides that the use of credit cards is bad, and introduces a tax on credit card balances. at is, if a consumer or firm holds a credit card balance of X (in real terms), he or she is taxed τX, where τ is the tax rate. Determine the effects on the equilibrium price and quantity of credit card balances, the demand for money, and the price level, and explain your results.

Reference no: EM13984262

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