Explain how each of the following events affects the money supply. (a) An increase in income tax

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Explain how each of the following events affects the money supply.
(a) An increase in income tax rates induces the public to conduct more of its business in currency to hide earnings.
(b) An increase in interest rates encourages the public to hold less currency.
(c) Banks obtain discount loans from the Fed.
(d) Increasing uncertainty about deposit withdrawals leads banks to hold on to excess reserves.
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Macroeconomics

ISBN: 978-0138014919

12th edition

Authors: Robert J Gordon

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