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Essays in Monetary Economics (Collected Works of Harry Johnson) by Harry G. Johnson

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APPENDIX: A PRACTICAL APPLICATION

Suppose that the individual’s bank has the following charging scheme (modelled on actual banking practice)

(i)  it charges £2 0s 0d per page of book entries; each page contains forty lines. Since the individual may be assumed to make only one deposit as compared with a number of withdrawals per period, this implies a fixed charge of 1s per withdrawal, no charge (effectively) for depositing, and no charges proportional to the amounts deposited or withdrawn on each occasion (in the formulae, B = K = k = 0,images

(ii) it allows credit for one page of entries against each £50 average balance; this amounts to an interest ...

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