Every Year More and More Purchases Are Made with Credit

question 137

Multiple Choice

Every year more and more purchases are made with credit cards on the Internet. Given this trend, all else equal, we would expect:

• A) the money demand curve to shift outward.
• B) the money demand curve to shift inward.
• C) a downward movement along a fixed money demand curve.
• D) an upward movement along a fixed money demand curve.

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Definitions:

Collateral

An asset pledged by a borrower to secure a loan or credit, which can be seized by the lender if the loan is not repaid.

Interest-free

Financial arrangements or loans that do not require the borrower to pay any extra amount over the principal borrowed amount.

Financial Institution

An organization that provides financial services, such as banks, insurance companies, and investment firms.