A local economy is experiencing a decrease in consumer money holdings due to an increase in credit card usage. As a result, the demand for money shifts leftward. What is the most likely outcome on the nominal interest rates and overall economic activity in this scenario?

When people use credit cards more often, they tend to hold less cash because they rely on credit for their purchases. This means that the demand for money decreases, which is represented by a leftward shift on the money demand curve. As the demand for money decreases, nominal interest rates are likely to fall because there is more money available relative to what people want to hold. Lower interest rates can encourage borrowing and spending, which might boost overall economic activity. For example, if a business can borrow money at a lower rate, it may invest in new projects, leading to more jobs and economic growth.