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To increase tax revenue, the U.S. government in 1932 imposed a 2-cent tax on cheques written on deposits in bank accounts. (In today's dollars, this
To increase tax revenue, the U.S. government in 1932 imposed a 2-cent tax on cheques written on deposits in bank accounts. (In today's dollars, this tax was about 25 cents per cheque.) 1. How do you think the cheque tax affected the currency-deposit ratio? Explain. 2. Use the model of the money supply under fractional-reserve banking to discuss how this tax affected the money supply.
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