Choose given statement true/False:

Demand deposits are included in the current currency system together with paper notes and coins.

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True

False

answer is A.

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Detailed Solution

The above statement is true.
Demand deposits are included in the current currency system, together with paper notes and coins.
Demand deposits are defined as those deposits that provide the issuance of checks to third parties in exchange for withdrawals on demand.
Banks keep only a small part of these demand deposits as liquid cash on hand. According to RBI regulations, banks can store up to 15% of their deposits in cash. This is kept in reserve to cover depositors who might show up at any time to withdraw money.

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