If Money Demand Decreases Due to Greater Use of Credit

question 90

Multiple Choice

If money demand decreases due to greater use of credit cards,which of the following would most likely happen under a neutralization policy?

• A) The money supply would decrease,real GDP would not change,and neither would the interest rate.
• B) The money supply would increase,real GDP would not change,and neither would the interest rate.
• C) The money supply would decrease,real GDP would increase,and the interest rate would decrease.
• D) The money supply would increase,real GDP would not change,and the interest rate would decrease.
• E) The money supply would decrease,real GDP would decrease,but the interest rate would not change.

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Definitions:

Invoices

Documents issued by a seller to a buyer, detailing a transaction and requesting payment.

Terms

Conditions and stipulations under which agreements or contracts are made, including payment deadlines, interest rates, and duties of each party.

Invoices

A document sent by a seller to a buyer, detailing the products or services provided, their prices, and the total amount owed.

Trade Discount

A reduction in the listed price of goods or services, usually offered to members of the same trade or business sector.