Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It decreases the demand for physical money as people choose credit cards.
B
It increases the demand for physical money due to lower transaction costs.
C
It has no effect on the demand for physical money.
D
It leads to a higher interest rate on physical money.
Understanding the Answer
Let's break down why this is correct
Answer
When credit card fees decrease, using credit cards becomes cheaper for consumers and businesses. This can lead to more people choosing to use credit cards for their purchases instead of cash. As a result, the demand for physical money, or cash, may decline because people find it more convenient to pay with cards. For example, if a coffee shop lowers the fees it pays for credit card transactions, it might encourage more customers to pay with cards rather than using cash. Overall, as credit card usage increases, the need for physical money decreases.
Detailed Explanation
When credit card fees go down, using credit cards becomes cheaper. Other options are incorrect because Some might think lower fees make cash more popular; This answer suggests nothing changes.
Key Concepts
Money Demand
Interest Rates
Consumer Behavior
Topic
Money Demand and Interest Rates
Difficulty
easy level question
Cognitive Level
understand
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