Credit card usage:
A)may expand money supply
B)may contract the money supply
C)neither expands nor contracts money supply
D)none of the above

Question

Quizplus · Accepted Answer

When a credit card is used, it allows the consumer to spend money they do not currently have, which expands the money supply in the short term. This is because the credit card issuer, usually a bank, is effectively loaning money to the consumer, creating new money in the system. However, if the credit card balance is not paid off in full and interest is charged, it could ultimately lead to a contraction in the money supply in the long term.

Credit Card Usage