Product details

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. The primary subject matter of this case concerns the effect of the introduction of credit cards and debit cards on money demand.