Are credit cards, money?, Macroeconomics

Assignment Help:

It is sometimes asked whether credit cards are money since many purchases are made using these. Credit cards are a means of obtaining credit and using this to finance expenditure, but they are not money. In fact, they substitute for money at the time purchases are made. And payment is ultimately made by movement of bank deposits, initially when the credit card company pays traders, and subsequently when users of credit cards pay the credit company.

Banks can create deposits and if they do so to settle the claims of traders, the use of credit cards can lead to an increase in the money supply. In this sense credit cards function as money only to the extent that credit bills are unpaid. However, unpaid credit bills are not recorded in the official measures of the money supply because it is impossible to calculate the amount of credit outstanding at any moment of time.


Related Discussions:- Are credit cards, money?

Components of balance of payments, Components of Balance of Payments   T...

Components of Balance of Payments   The BoP statement is usually divided into three major groups of accounts. These are: i.The Current Account: This account records the imp

Imperfect-information model, According to the imperfect-information model, ...

According to the imperfect-information model, when the price level is greater than the expected price level, output will _____ the natural level of output A) be greater than

Money, how to calculate the ultimate change in deposits and credit?

how to calculate the ultimate change in deposits and credit?

Measurement of output, Different approaches to measure aggregate output

Different approaches to measure aggregate output

Financial payments flow between firms and government, Explain whether, the...

Explain whether, the following statements are TRUE, FALSE or UNCERTAIN. Briefly justify your answer. (i) The circular flow shows how real resources and financial payments flow

Price - macroeconomy relationship, There are many other macroeconomic indic...

There are many other macroeconomic indicators which one might expect to be affected following an oil price hike. Perhaps more obviously affected than GNP is inflation. DePratto et

#title.national income ddetermkination, explain how national income is dete...

explain how national income is determined under the following economies; 1.frugal economy 2.governed economy

Company undertake the project, Q1. A company selling widgets advertises thr...

Q1. A company selling widgets advertises through three types of media: print, television and internet. Recently the company has decided to increase its advertising budget by $100,0

Conclude a hypothesis test, Will improving customer service result in highe...

Will improving customer service result in higher stock prices for the companies providing the better service? When a companys satisfaction score has improved over the prior years r

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd