QAEconomics › If Evelyn uses her debit card to buy an iPod, then the money to pay the retailer will come from:
Q

If Evelyn uses her debit card to buy an iPod, then the money to pay the retailer will come from:

a) the debit card company’s M1 funds.

b) the debit card company’s M2 funds.

c) her M2 funds.

d) her M1 funds.

A

Answer: A. The debit card company’s M1 funds.

A company’s M1 funds are the basic money supply a country has, which it dispenses as a legal tender for buying and selling. M1 funds comprise of deposits for demands and checking accounts. Checking accounts are the single medium of exchange that is most widely and most commonly used, as they permit the use of ATMs, debit cards, etc.

Generally, M1 funds do not include assets and valuable financial property like bonds, stocks, or savings accounts.

M1 generates the funds that will be paid to the retailer for Evelyn’s iPod.

2 weeks ago
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