Final answer:
Debit cards, credit cards, and smart cards are forms of plastic money used for transactions with each functioning distinctly. Debit cards draw directly from bank funds, credit cards act as short-term loans, and smart cards hold a prepaid value for payments.
Step-by-step explanation:
A debit card functions similarly to a check; it instructs the bank to transfer money from your bank account to the seller. It's important to note that what constitutes money here are the checkable deposits, not the physical card or paper check.
On the other hand, a credit card represents a short-term loan from the credit card company to you, the user. When you make a purchase, the company pays the seller on your behalf and sends you a bill for the same amount later, which is when the loan effectively becomes due.
In contrast, a smart card holds a prepaid amount of money for transactions. Although some smart cards are limited to specific uses or locations, they provide a convenient way to pay without cash. However, simply having more cards does not affect the overall quantity of money in the economy.