Which of the following statements is correct?
A) Credit cards are important for our system of payments,but they are not important for analyzing the monetary system.
B) Account balances that lie behind debit cards are included in M1 and in M2.
C) People who have credit cards probably hold more money on average than people who do not have credit cards.
D) A debit card is more similar to a credit card than to a check.

Question

Quizplus · Accepted Answer

According to the definition of M1 and M2, account balances that lie behind debit cards are included in both measures of the money supply. A is incorrect because credit cards are important for analyzing the monetary system as they affect the velocity of money. C is unsupported and therefore incorrect. D is incorrect because a debit card is more similar to a check, as both involve funds being directly withdrawn from an account, whereas a credit card is a form of borrowing.

Which of the Following Statements Is Correct