What are demand deposists ? How is money safe with banks? Explain
A demand deposit is an account with a bank or other financial institution that allows the depositor to withdraw his or her funds from the account without warning or with less than seven days' notice. Demand deposits are a key component of the M1 moneysupply calculated by the Federal Reserve.
WHY IT MATTERS:Demand deposits are important to consumers because they often house the funds to pay day-to-day expenses. Without the ability to obtain funds on demand, depositors would not be able to make any purchases without first telling the bank.
The amount of demand deposits an institution has often dictates all or part of the reserves it must keep on hand either in vault cash or on deposit with the Federal Reserve; the more dollars an institution has in demand deposits, the more dollars it must keep in reserves.