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What is the primary distinction between credit cards and debit cards in relation to the monetary system?
What is the primary distinction between credit cards and debit cards in relation to the monetary system?
- Credit cards represent a form of money, while debit cards do not.
- Credit cards are included in measures of the quantity of money, but debit cards are not.
- Debit cards are a method of payment, while credit cards are a method of borrowing.
- Debit cards allow immediate access to funds, while credit cards defer payment. (correct)
When using a credit card, which of the following best describes the flow of funds?
When using a credit card, which of the following best describes the flow of funds?
- The transaction is recorded as a loan from the bank to you.
- The merchant receives payment directly from your credit card balance.
- The bank pays the merchant on your behalf, and you repay the bank later. (correct)
- The bank transfers funds from your account to the merchant's account.
If you were to write a check to pay your credit card bill, what component of the monetary system would the check be drawn from?
If you were to write a check to pay your credit card bill, what component of the monetary system would the check be drawn from?
- The outstanding credit card debt.
- The credit card balance itself.
- The bank's reserves held at the central bank.
- The balance in your checking account. (correct)
How are debit card transactions treated in the measurement of the quantity of money?
How are debit card transactions treated in the measurement of the quantity of money?
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Why are credit cards not considered a form of money in the monetary system?
Why are credit cards not considered a form of money in the monetary system?
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If a consumer uses a debit card to make a purchase, what happens to the money supply?
If a consumer uses a debit card to make a purchase, what happens to the money supply?
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