If Debit Cards Become More Widely Used by Consumers and Businesses

question 64

Multiple Choice

If debit cards become more widely used by consumers and businesses, which of the following is most likely to happen?

• A) Currency holdings will remain the same, but the M1 money supply will fall.
• B) The amount of currency held by the public will increase.
• C) Less money will be held as currency and more money will be held in bank accounts, which will increase the reserves of banks unless the Fed takes offsetting actions.
• D) The money supply will be unaffected because debit card expenditures are considered the equivalent of cash.

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Definitions:

Net Fixed Assets

The value of a company's property, plant, and equipment minus any depreciation, representing the company's long-term investments.

Operating Cash Flow

The cash generated from the normal operations of a business, indicative of the company's financial health.

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Intangible Assets

Intangible assets are non-physical assets owned by a business, such as patents, trademarks, goodwill, and licensing agreements, known for their long-term value.