Final answer:
Credit cards are generally used for purchases like meals, clothing, and groceries, not homes, stocks, or cars. They represent short-term loans from credit card companies to the user, and using them does not alter the overall money supply.
Step-by-step explanation:
Credit cards are commonly used for transactions that include day-to-day expenses. The correct answer is b. meals, clothing, and groceries. Credit cards are a form of “plastic money” and are considered a short-term loan from the credit card company to the purchaser, rather than actual money. When you make a purchase with a credit card, the credit card company pays the seller immediately and then bills you for the amount spent. Using a credit card does not change the quantity of money in the economy; it is simply a method of deferring payment and potentially accruing debt. Savings are critical as they help make funds available to borrowers and make future purchases possible without incurring debt. Understanding the difference between “good debt” and “bad debt” is essential when using credit cards.