Are outstanding credit card balances counted as part of the money supply?
A)Yes;they are used to purchase things,and therefore,they are included in the money supply figures.
B)No;money is an asset,while the credit card balances are a liability.Thus,they are not included in the money supply figures.
C)Partly;credit card balances of $100 or less are included in the M1 money supply,but the money supply figures do not include balances in excess of $100.
D)Partly;credit card balances are included in the M1 money supply,but not the M2 money supply.

Question

Quizplus · Accepted Answer

Credit card balances are not considered part of the money supply as they are a liability rather than an asset. The money supply includes only the amount of money in circulation, such as cash, checking accounts, and savings accounts. Outstanding credit card balances are a debt owed by the borrower to the credit card company and do not add to the overall money supply.

Are Outstanding Credit Card Balances Counted as Part of the Money