Question

Credit cards are

A. included in the M2 definition of the money​ supply, but not in the M1 definition.
B. included in neither the M1 definition of the money supply nor in the M2 definition.
C. included in the M1 definition of the money​ supply, but not in the M2 definition.
D. included in both the M1 and the M2 definitions of the money supply.

Answer 1

The correct answer is option B.

Step-by-step explanation:

There are four definitions of the money supply. Out of these four, the narrowest and the most liquid definition is M1. It includes the currency in circulation and checking deposits.

While M2 includes everything in M1, savings​ accounts, small time​ deposits, and money markets.

Credit cards are not considered a part of the money supply, they are not included in either M1 or M2 or any other definition. credit cards do not change the quantity of money in the economy. They are not considered money but rather a short loan from the credit card company.