Question

What are demand deposits? (3 marks)​

Answer 1

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Demand Deposits

• Workers who receive their salary at the end of each month have extra cash at the beginning of the month
• This extra cash is deposited with the bank by opening a bank account in their name
• Bank except the deposits and also pay and interest rate on the deposits
• In this way people's money is safe with the bank and it earns an interest as well
• People also have the provision to withdraw the money as and when they require
• Since the deposit in the bank accounts can be withdrawn on demands, these deposits are called demand deposits

Answer 2

Answer:

Demand Deposit

A demand deposit account (DDA) consists of funds held in a bank account from which deposited funds can be withdrawn at any time, such as checking accounts. DDA accounts can pay interest on a deposit into the accounts but aren’t required. A DDA allows funds to be accessed anytime, while a term deposit account restricts access for a predetermined time.

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