Which of the Following Statements Is NOT True of Credit

question 21

Multiple Choice

Which of the following statements is NOT true of credit cards?

• A)The rate of return to banks from credit card lending is lower than for other bank assets.
• B)Credit cards represent a preauthorized line of credit to borrowers.
• C)The first credit cards to be widely accepted were nonbank travel and entertainment cards.
• D)If bank cardholders don't pay the balance in full every month, they pay a finance charge on the unpaid balance.

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Definitions:

Open Market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates.

Inflation

A sustained increase in the general price level of goods and services in an economy over a period of time, leading to a decrease in the purchasing power of money.

Vault Cash

Physical currency held by banks within their vaults, used to meet customer withdrawals and other cash needs.

Primary Reserve

It is the part of a country's reservable deposits held in cash or in deposits with the central bank, used to manage liquidity and fulfill regulatory requirements.