Question

Explain ow demand deposits share the essential features of money

Answer 1

• Demand deposits are the deposits which can be withdrawn on demand.
• Demand deposits eliminates the use of cash.
• Money can be easily deposited and withdrawn from the banks.
• Demand deposits are an essential feature of money.

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Answer 2

Demand deposits share the essential features of money in the following way:

1. Use of cheques instead of cash.

2. They constitute money in a modern economy.

• Demand deposits make use of cheques to transfer money.
• Cheques are used to transfer money from one account holder to another account holder.
• It takes around 2-3 working days for the cheque to be sanctioned in order to send or receive money in one's bank account.
• Demand deposit helps in the settlement of payments without the use of cash.
• Nowadays, cheques are used to transfer huge amounts of money and share an essential feature of money in our modern economy.