Question

What are demand deposits? What are its features?

Answer 1

Answer:

People with surplus money or extra amount deposit it in banks. The banks keep the money safe and give an interest on it. The deposits can be drawn at any time on demand by the depositors. That is why they are called 'demand deposits'.

The features of it are:-

⇒The demand deposits encashable by issuing cheques have the essential features of money.

⇒They make it possible to directly settle payments without the use of cash.

⇒Since demand drafts/cheques are widely accepted as a means of payment along with currency, they constitute money in the modern economy.

Answer 2

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A Demand desposit is an account with a bank or other financial institution that allows the despositor to withdraw his or her funds from the account without warning or with Less than seven day's notice. Demand Deposits are a key component of the 1M money supply calculated by the Federal Reserve.

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1. Demand desposits can be withdrawn from bank whenever we want.
2. They are widely accepted as the means of payment, similar to currency.
3. They are closely linked in the working of the modern banking system. They earn an amount of interest.