options for A

1. Less or more

2.currency or demand deposits

3. increase or decrease

c. monetary base or money supply

decrease or increase

reduced or increased

bad idea or good idea

The Monetary System -- End of Chapter Problem To increase tax revenue, the U.S. government imposed a 2-cent tax on checks written on bank account deposits in 1932 (in today's dollars, about 34 cents per check). Complete the following statements on the impact of this tax on the money multiplier and the money supply a. The tax on written checks would niake people likely to write checks. Thus, people might start holding more the currency-deposit ratio. money as This would b. Under this check tax, the money supply would have increased, because the currency-deposit ratio increased, which in turn decreases the money multiplier increased, because the currency deposit ratio increased, which in turn increases the money multiplier. decreased, because the currency-deposit ratio increased, which in turn decreases the money multiplier. not changed, because the check tax would not impact the money supply or the money multiplier decreased, because the currency deposit ratio increased, which in turn increases the money multiplier b. Under this check tax, the money supply would have increased, because the currency-deposit ratio increased, which in turn decreases the money multiplier. increased, because the currency-deposit ratio increased, which in turn increases the money multiplier, decreased, because the currency-deposit ratio increased, which in turn decreases the money multiplier not changed, because the check tax would not impact the money supply or the money multiplier, decreased, because the currency deposit ratio increased, which in turn increases the money multiplier c. Many economists believe that the sharp decline in the in the early 1930s was at least partially responsible for the severity of the Great Depression. The check tax was intended to increase government revenue. However, the unintended consequence of the check tax was to deposits in banks, which the money supply further. From this perspective, the check tax policy was a