Chapter 14, Problem 16AA

To determine

To ascertain: The reason why the checking accounts formerly known as demand deposits.

Explanation of Solution

A checking account is a savings account used by bank customers to manage their spending and to pay. Most clients link their bank accounts to credit cards and savings accounts which are important for having bigger loans like a mortgage. A person can withdraw at any time of their funds deposited in a bank by writing a check.

The bank will pay the check amount when it will be presented in the bank. Moreover, formerly it was known by the name of demand deposits because deposited money is payable on demand.

Today, checkable deposits are provided by a number of financial institutions. Most banks provide the consumer with checking accounts at no expense. However, banks can also make a profit on such accounts by implying very high fees when customers check is larger than the balance of their accounts.

Economics Concept Introduction

Introduction: A demand deposit account consists of funds kept in a customer banking account from the customer which had deposited and can be withdrawn at the time of their need, such as checking accounts. It allows access to funds at any time.