Impact of ban on credit cards on money supply

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Reference no: EM1314057

Credit cards are sometimes discussed as a public problem. In 2001, purchases on credit cards accounted for 21% of consumer spending in America, which has the lowest savings rate of any big country. Credit cards have also been blamed for America's high rate of bankruptcy. In 1998, bankruptcies reached a high of 1.4 million.

Maybe we can fix this blight. What would be the effect on the money supply if credit cards were banned? What about the effect on the demand for money? What other results, intended and unintended, can you imagine from the passage of such a law?

Reference no: EM1314057

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