Question

why are demand deposits considered as money?​

Answer 1

Answer:

Demand deposits are considered as money, because they can be withdrawn when required and the money withdrawn can be used for making payments. So, they are also considered as money in the modern economy.

Explanation:

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Answer 2

Demand deposits are considered money because they can be liquefied.

Explanation:

1. Demand deposits are short-term deposits that a customer keeps with the bank.
2. Demand deposits have higher rate of interest as compare to the normal savings with banks.
3. These are just like fixed deposits but are more liquid in nature and can be converted into cash when the need arises.
4. Demand deposits are a form of investment with less commitment as it can be withdrawn from banks without any due date or penalties.