Question

demand deposits constitute money in the modern economy . justify

Answer 1

People have the provision to withdraw the money as and when they require. Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits. They exhibit essential features of money:

The facility of demand deposits makes it possible to directly settle payments without the use of cash.
Demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.

Answer 2

Answer:

People have the option of withdrawing money whenever they choose. Deposits in bank accounts are known as demand deposits because they can be withdrawn on demand. They demonstrate the following characteristics of money:

• Demand deposits allow for direct payment settlement without the usage of the currency.
• Demand deposits are generally accepted as a form of payment, and they, along with cash, make up the money in the modern economy.

Explanation:

• Since the deposits in the bank accounts can be withdrawn as and when needed or on-demand, these deposits are called demand deposits.
• Demand deposits are similar to money in the following ways:- The ability to use cheques against demand deposits allows for direct payment settlement without the usage of cash.
• Demand deposits, along with cash, comprise money in the modern economy because they are generally accepted as a form of payment.