Even Though Credit Cards Are Used by Many People in Making

question 95

Multiple Choice

Even though credit cards are used by many people in making purchases,they are not included in the M1.A major reason is that

• A)credit cards are a way of going into debt,whereas the components of M1 represent assets.
• B)credit cards had not yet been invented when money was defined.
• C)some credit cards are issued by stores (such as Sears),whereas all money is issued by banks.
• D)credit cards are much less liquid than M1.
• E)credit cards don't affect consumer expenditures,whereas M1 does.

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Definitions:

Market Price

The existing cost for acquiring or disposing of an asset or service in a designated market.

Competitive Market

A market structure characterized by many buyers and sellers, freedom of entry and exit, and products that are similar, leading to competition driving prices to equilibrium.

Lowest Price

the minimum price at which a product or service is offered in the market.

Producer Surplus

The difference between the amount that producers are willing to accept for a good or service and the actual amount they receive, due to higher market prices.