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| 1. |
What is demand deposits? |
| Answer» \tWorkers who receive their salaries at the end of each month have extra cash at the beginning of the month.\tThis extra cash is deposited with the bank by opening a bank account in their name.\tBanks accept the deposits and also pay an interest rate on the deposits.\tIn this way, people’s money is safe with the banks and it earns an interest as well.\tPeople also have the provision to withdraw the money as and when they require.\tSince the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits. | |