Credit Cards, Debit Cards, and Money Demand

Document Type

Article

Publication Date

2008

Publication Title

Journal of the International Academy for Case Studies

ISSN

1078-4950

Abstract

John Williams recently returned from a trip on which he realized that he no longer needed cash-not even at fast food restaurants. Everyone accepts credit and debit cards these days. He becomes concerned that this may mean that money is going away. He begins to look into the idea of a cashless society. Certainly credit and debit cards will play a large role in a cashless society. He quickly realizes that to truly understand the impact of credit and debit cards, he will have to understand their impact on money demand (specifically M1 and M2). He researches the four key theories of money demand-The Quantity Theory of Money, Keynes 's Liquidity Preference Theory, Friedman's Modern Quantity Theory of Money, and the Baumol-Tobin Model-and comes up with a list of questions applying the impacts of credit cards and debit cards to the results of the models.

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Copyright The DreamCatchers Group, LLC 2008. Permission is needed to access this work.

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