How do demand deposits have the essential features of money? Explain.
The deposits with banks constitute the modern form of money. People also have the provision to withdraw their money deposited in the bank as and when they require. Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits. Demand deposits offer another interesting facility of payment through a cheque instead of cash which lends it the essential characteristics of money (that of a medium of exchange). For payment through cheque, the payer who has an account with the bank makes out a cheque for a specific amount.
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