Question

What is the meaning of the following sentence"since demand deposits are accepted widely as a mean of payment along with currency they constitute money in the modern economy"

Answer 1

Dear student,

People are given the option to withdraw the money as and when they require from the banks. Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits. These demand deposits can settle the issue of payments without cash. Hence, these demand deposits have become a popular and widely accepted means of payment along with money or currency notes. These demand deposits can be called a form of money in modern economy as they settle payments like money.

Regards.