BANKING GENERAL KNOWLEDGE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
They can be readily used in purchasing goods and paying debts
|
|
|
banks hold currency equal to the value of their checkable deposits
|
|
|
they are ultimately the obligations of the Treasury
|
|
|
they earn interest income for the depositor
|
Detailed explanation-1: -Checkable deposits are classified as money because: they can be readily used in purchasing goods and paying debts. To say that coins are “token money” means that: their face value is greater than their intrinsic value.
Detailed explanation-2: -Checkable deposits are money because their owners can write checks against them. Federal Reserve Notes are liabilities of the Federal Reserve. (Printed by the U.S. Bureau of Engraving and Printing.) They can only be exchanged for more currency, so they are fiat money.
Detailed explanation-3: -It is a liability, because it is money the bank owes to the depositors should they demand their funds back. From the perspective of an individual person or firm holding the checking account, checkable deposits are an asset.
Detailed explanation-4: -Checkable deposit accounts include checking, savings, and money market accounts. Interest rates depend on the bank and the type of account. A checkable deposit account allows the customer to access cash at any time.
Detailed explanation-5: -It is important to note that in our definition of money, it is checkable deposits that are money, not the paper check or the debit card. Although you can make a purchase with a credit card, it is not considered money but rather a short term loan from the credit card company to you.