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:

New Project

An initiative or plan that is undertaken to achieve specific goals, often involving tasks that have not been done before.

Start-up Operation

The initial actions and processes involved in establishing and beginning the functioning of a new business or project.

Administrative Activities

Tasks related to the management and organization of a business or institution, including planning, directing, and overseeing operations.

Gatekeeper

An individual or entity that controls access to something, often information or resources.