Google
Sunday 
October 17, 2021 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
HDI: An abbreviation of the Human Development Index, whichn is a summary composite index that measures a country's average achievements in three basic aspects of human development: longevity, knowledge, and a decent standard of living. Longevity is measured by life expectancy at birth; knowledge is measured by a combination of the adult literacy rate and the combined primary, secondary, and tertiary gross enrollment ratio; and standard of living is measured by GDP per capita. The Human Development Index (HDI), reported in the Human Development Report of the United Nations, is an indication of where a country is development wise. The index can take value between 0 and 1. Countries with an index over 0.800 are part of the High Human Development group. Between 0.500 and 0.800, countries are part of the Medium Human Development group and below 0.500 they are part of the Low Human Development group.

Visit the GLOSS*arama


DEMAND DEPOSITS:

Standard checking accounts maintained by commercial banks. They pay no interest on balances and as the name indicates, the funds can be withdrawn "on demand," which is accomplished by writing a check. Demand deposits on the only type of checkable deposits that can be legally offered to businesses. Demand deposits are one type of checkable deposits. Others are NOW accounts, share drafts, and ATS accounts.
A few decades back, demand deposits were synonymous with checking accounts. Demand deposits WERE checkable deposits. The only form of checkable deposits available were demand deposits maintained by traditional commercial banks. In these simpler times, banks offered two basic types of accounts to their customers--checking accounts and savings accounts.
  • Checking accounts, or demand deposits, were used as money. Customers wrote checks on these accounts which they used in exchange for goods and services. These checking accounts paid no interest on outstanding balances. They provided customers with liquidity, a medium of exchange as good as, or even better than, cash.

  • Savings accounts, or time deposits, were used to store wealth. These accounts paid an interest on outstanding balances, but could not be used directly to make purchases. Customers had to withdraw currency or transfer wealth from savings accounts into checking accounts to make purchases.
However, the world of banking became increasing complicated in the 1970s and 1980s. Interest rates increased. Deregulation freed banks to pursue a life of higher profit. Financial markets became more competitive. Other depository institutions (credit unions, savings and loan associations, and mutual savings banks) invaded the territory once controlled exclusively by traditional banks. And demand deposits were no longer the only checkable deposits available.
  • NOW Accounts: Savings and loan associations and mutual savings banks issued what they termed NOW accounts--negotiable orders of withdrawal. A "negotiable order of withdrawal" is essentially another term for "check." While these were basically checking accounts, an interest was paid on the balance of funds.

  • Share Draft Accounts: Credit unions got into the act by offering share draft accounts. Because "draft" is also another term for "check" this too was another type of checking account, but which also paid an interest on the balance in the account.

  • ATS Accounts: To remain competitive with the interest-paying "checking accounts" offered by their depository competition, traditional commercial banks began offering automatic transfer services (ATS) accounts. This involved the automatic transfer of funds from a savings account to a checking account to process checks. This service allowed banks to pay interest on the balance of the savings account, even though the savings account effectively functioned as a checking account.
Even with all of these innovative ways of attracting deposits from customers, traditional demand deposits remained in operation. Demand deposits provided customers with liquidity, but paid no interest. For many household consumers, this was and remains a satisfactory service. However, for business customers, this was and is the ONLY service. Government regulations prevent businesses from having interest-paying checking accounts. They can have ONLY demand deposits--no NOW accounts, no share draft accounts, no ATS accounts.

Demand deposits, while once the only option available, continue to account for half of the checkable deposits issued by traditional commercial banks and other depository institutions and are one-fourth of the M1 money supply.

<= DEMAND DECREASE AND SUPPLY INCREASEDEMAND DETERMINANTS =>


Recommended Citation:

DEMAND DEPOSITS, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: October 17, 2021].


Check Out These Related Terms...

     | checkable deposits | currency | Federal Reserve notes | near monies | plastic money |


Or For A Little Background...

     | money | money functions | medium of exchange | M1 | saving | liquidity | banks | financial markets | business |


And For Further Study...

     | money creation | fractional-reserve banking | banking | Federal Reserve System | monetary economics | monetary base | monetary policy | debit card | monetary economics |


Related Websites (Will Open in New Window)...

     | Federal Reserve System | Federal Reserve Education | U.S. Department of the Treasury | The Currency Gallery |


Search Again?

Back to the WEB*pedia


APLS

BROWN PRAGMATOX
[What's This?]

Today, you are likely to spend a great deal of time searching the newspaper want ads trying to buy either a birthday greeting card for your father or a T-shirt commemorating the first day of spring. Be on the lookout for florescent light bulbs that hum folk songs from the sixties.
Your Complete Scope

This isn't me! What am I?

More money is spent on gardening than on any other hobby.
"Do what you feel in your heart to be right for you'll be criticized anyway. You'll be damned if you do and damned if you don't. "

-- Eleanor Roosevelt, first lady

LIFO
Last In First Out
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2021 AmosWEB*LLC
Send comments or questions to: WebMaster