Even though credit card balances and limits are not included in any definition of money supply, these balances and limits can affect the rate of turnover of money supply and contribute to money supply expansion.

Question

Quizplus · Accepted Answer

While credit card balances and limits are not officially considered part of the money supply, they can still affect the velocity of money and thus contribute to overall money supply expansion. This is because credit card balances represent debts that can be used to make purchases, effectively increasing the amount of money in circulation. Additionally, higher credit limits can encourage more borrowing and spending, further fueling the expansion of the money supply.

Even Though Credit Card Balances and Limits Are Not Included