Demand and Term Deposit

Question 1

• money deposited into a bank account with funds that can be withdrawn on-demand at any time.
• depositor’s funds to pay for everyday expenses.
• either a low or zero interest rate
• certain daily limit or limit of account balance

Answer 1

Demand Deposit

Question 2

• most common types of demand deposits
• offers the greatest liquidity, allowing cash to be withdrawn at any time.
• earn only zero or minimal interest
• Interest paid may vary based on the financial provider.

Answer 2

Checking Account

Question 3

• held at a slightly longer duration compared to the short-term use of the checking account.
• offer less liquidity; though, for an extra fee, money may transferred to the checking account.
• come with a minimum required balance.

Answer 3

Savings Account

Question 4

• demand deposits that follow market interest rate.
• It pays interest either more or less than a savings account.
• Traditionally, it offers a competitive rate to savings accounts.

Answer 4

Money Market Account

Question 5

Importance

Answer 5

Consumer Spending
Bank Reserves
Money Supply

Question 6

Demand deposits are important in consumer spending, as they hold the funds used to pay for everyday expenses.

Answer 6

Consumer Spending

Question 7

Demand deposits are important for institutions, as the total amount held in deposit accounts determines thebank reservesthat must be kept on hand.

Answer 7

Bank Reserves

Question 8

M1 money consists of currency plus demand deposits. Demand deposits make up a significant part of the money supply in many countries.

Answer 8

Money Supply

Question 9

a fixed-term investment that includes thedeposit of money.
- can withdraw their funds only after the term end.
- usually short-term deposits with maturities ranging from one month to a few years.

Answer 9

Term Deposit

Question 10

The spread between the rate the bank pays its customers for deposits and the rate it charges its borrowers

Answer 10

Net Interest Margin