Question

1)Trace the impact of a new free credit card on the us economy. How would this differ from a fee credit card?

2)How does the treasury call in bonds? Trace the effect of calling in bonds on the US economy

Answer 1

Explanation:

• Credit card normally stops the flow of cash spending and because of that jobs are reduces, as people who use credit card and have heavy debt on them usually surrender to unemployment benefits and that eventually put pressure on government spending more on unemployment service. There will be less tax since there is cut in jobs.
• Most of the business like travel, retail stores, and auto part shops in US mostly depend on credit card and jobs in this industries depend on heavy spending with credit card as heavy expenses could not be paid cash. This retailers simply depends on heavy spenders through credit card and if there is no spenders like this, business of this people would die and causing huge damages to US economy.

Free credit card will encourage every people to have it and would eventually increase the debt pressure on every, which also reduce the cash spending causing cash crunch in economy. Free credit card will also encourage person to own credit card who does not have money to pay the credit card fee every month.

On other hand credit card which have to pay fees every month will not motivate person who cannot afford credit card payment. It will not encourage people to own credit card as that person have to pay credit card fees every month from their account.