Which definition of the money supply includes credit cards?

The correct answer is d) neither M1 nor M2 includes credit card balances.

M1 and M2 are classifications of the money supply used in economics. M1 includes the most liquid forms of money, such as cash, demand deposits, and other checkable deposits. M2 includes all of M1, plus savings accounts, time deposits, and other near-money assets.

Credit cards, however, do not represent actual money or liquid assets. They allow consumers to borrow money to make purchases, which means that the balances on credit cards are considered liabilities rather than assets in the context of money supply. Therefore, neither M1 nor M2 includes credit card balances because credit cards do not constitute a form of money in circulation.

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