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Assertion (A)': The facility of demand d...

Assertion (A)': The facility of demand deposits makes it possible to settle' payments without the use of cash.
Reason (R) : Demand deposits are paper orders which make it possible to transfer money from one person's account to another person's account.

A

Both A and R are true and R is the correct explanation of A.

B

Both A and R are true but R is NOT the correct explanation of A.

C

A is correct but R is wrong.

D

A is wrong and R is correct.

Text Solution

Verified by Experts

The correct Answer is:
D
The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash. Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.
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Read the source given below and answer the questions that follows: Modern forms of money include currency - paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. The other form in which people hold money is as deposits with banks. At a point of time, people need only some currency for their day-to-day needs. People also have the provision to withdraw the money 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 Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits.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. It is this facility which lends it the essential characteristics of money (that of a medium of exchange). You would have heard of payments being made by cheques instead of cash. For payment through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount. A cheque is a paper instructing the bank to pay a specific amount from the person's account to the person in whose name the cheque has been issued . What is the other form of money people hold?

Read the source given below and answer the questions that follows: Modern forms of money include currency - paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. The other form in which people hold money is as deposits with banks. At a point of time, people need only some currency for their day-to-day needs. People also have the provision to withdraw the money 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. It is this facility which lends it the essential characteristics of money (that of a medium of exchange). You would have heard of payments being made by cheques instead of cash. For payment through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount. A cheque is a paper instructing the bank to pay a specific amount from the person's account to the person in whose name the cheque has been issued . What the earlier currencies were made from?

Knowledge Check

  • What is a paper instructing the bank to pay a specific amount from one person's account to another person's account called?

    A
    Lease
    B
    Order
    C
    Cheque
    D
    Transfer

  • A shopkeeper Sudha has to make a payment to the wholesaler and writes a cheque for a specific amount to the wholesaler. The wholesaler takes this cheque, and deposits it in his own account in the bank. The money is transferred form one bank account to another bank account in a couple of days. The transaction is completed without any payment of cash.

    A
    Check payment
    B
    Interest on deposits
    C
    Demand deposit
    D
    Money transfer

  • Read the source given below and answer the questions that follows: Modern forms of money include currency - paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. The other form in which people hold money is as deposits with banks. At a point of time, people need only some currency for their day-to-day needs. People also have the provision to withdraw the money 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. It is this facility which lends it the essential characteristics of money (that of a medium of exchange). You would have heard of payments being made by cheques instead of cash. For payment through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount. A cheque is a paper instructing the bank to pay a specific amount from the person's account to the person in whose name the cheque has been issued . What the deposits in bank, which are withdrawn on demand, are called?

    A
    cheque
    B
    cash
    C
    credit
    D
    demand deposits

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    Read the source given below and answer the questions that follows: Modern forms of money include currency - paper notes and coins. Unlike the things that were used as money earlier, modern currency is not made of precious metal such as gold, silver and copper. And unlike grain and cattle, they are neither of everyday use. The modern currency is without any use of its own. The other form in which people hold money is as deposits with banks. At a point of time, people need only some currency for their day-to-day needs. People also have the provision to withdraw the money 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. It is this facility which lends it the essential characteristics of money (that of a medium of exchange). You would have heard of payments being made by cheques instead of cash. For payment through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount. A cheque is a paper instructing the bank to pay a specific amount from the person's account to the person in whose name the cheque has been issued . What is a cheque?

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