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Elisabeth gets a new credit card with a $ 5 comma 000 credit limit.Elisabeth gets a new credit card with a $5,000 credit limit. Is this counted in M1​ only, M2​ only, M1 and​ M2, or​ neither?

User Sharmayne
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Answer:

Neither M1 nor M2

Step-by-step explanation:

The money supply can be defined as the stock of currency and other liquid instruments circulating in an economy at a particular time. It includes cash, coins, savings accounts, the balance held in checking accounts and other near money instruments.

These four definitions of money, M1, M2, M3, and M4. A credit card is not included in any of these. It is not considered as money. Holding a credit card does not change the money supply.

Instead of money, it is rather considered a short term loan. Money is a financial asset while credit card debts are liabilities. So they will not be included in M1 or M2.

User Matheus Frik
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