Refer to the Following Table to Answer the Following Questions

question 102

Multiple Choice

Refer to the following table to answer the following questions:
-As credit card balances increase,what will be the consequence for M1 and M2?

• A) There will be no effect on M1 or M2.
• B) M1 will decrease and M2 will increase.
• C) M1 will increase and M2 will decrease.
• D) M1 and M2 will both decrease.
• E) M1 and M2 will both increase.

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Definitions:

Simple Rate of Interest

Interest calculated only on the principal amount of a loan or deposit, without compounding.

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically used for the financing of payroll, accounts payable, inventories, and meeting other short-term liabilities.

Price

The amount of money required to purchase a good, service, or asset.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's cost.