Homework Answers
3. Ans. c) They are a method of deferring payment.
Credit cards postpone the payment made for your purchases until the next payment cycle and hence buyer doesn't have to pay immediately. Thus it is a method of deferring payment.
It is not a payment form of money, as it is not liquid cash, not a part of the M1 money supply which involves cash and travellers' cheques. It is not a unit of account because it is a borrowed money acting as a medium of exchange.
Thus the correct answer is c) Credit Cards are a method of deferring payment.
4. Ans. b) demand deposits, d) travellers' cheques
M1 is the most liquid form of money which includes cash, coins or can be easily converted into cash. It includes coins, cash, demand deposits and travellers' cheques.
Government bonds and savings deposits cannot be easily converted into cash and thus is not a part of M1.
Thus the correct answer is b) demand deposits, d) travellers' cheques
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