Credit cards:
A)are part of the M1 money supply.
B)are part of the M2 money supply.
C)are part of both the M1 and M2 money supply.
D)may affect the demand for money

Question

Quizplus · Accepted Answer

Credit cards may affect the demand for money as they provide a method of payment that allows individuals to defer payment until a later date. This may reduce the need for individuals to hold cash or other forms of liquid assets in the short term. However, credit card balances can also be viewed as a form of debt, which may increase the demand for money in the long term as individuals seek to pay off their balances. Credit cards are not considered a part of either the M1 or M2 money supply as they do not represent physical currency or deposits in financial institutions.

Credit Cards