The Basic Distinction Between Demand Deposits and NOW Accounts Is

question 32

Multiple Choice

The basic distinction between demand deposits and NOW accounts is that NOW accounts

• A) are fiat money; demand deposits are near money.
• B) serve primarily as a store of value; demand deposits serve as a medium of exchange.
• C) are a part of the money supply only when broadly defined; demand deposits are part of the money supply when narrowly defined.
• D) are essentially interest-bearing checking accounts; demand deposits earn no interest.
• E) must be converted into currency before they can be used; demand deposits can be used directly.

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