Model of money supply under fractional-reserve banking

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Reference no: EM13840226

To increase tax revenue, the US government in 1932 imposed a two-cent tax on checks written on deposits in bank accounts (In today’s dollars, this tax was about 25 cents per checks)

1. Use the model of the money supply under fractional-reserve banking to discuss how this tac affected the money supply.

2. Many economists believe that a falling money supply was is part responsible for the severity of the Great Depression of the 1930s.From this perspective, was the check tax a good policy to implement in the middle of the Great Depression?

Reference no: EM13840226

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