If there is an increase in the amount of currency held outside ...

[plus1]

If there is an increase in the amount of currency held outside banks, then the
 
  A) quantity of money and the monetary base will decrease.
  B) monetary base will decrease.
  C) quantity of money will increase.
  D) quantity of money will not change.
  E) quantity of money will decrease.

Question 2

In the United States since 1970, how has the use of credit cards affected the demand for M1 as a percentage of GDP?
 
  What will be an ideal response?

[blfontai]

Answer to Question 1

E

Answer to Question 2

Since 1970, credit cards have become more widespread. As a result, the demand for M1 as a percentage of real GDP has decreased.