What is the primary reason why people prefer to hold money as deposits in banks?

They are guaranteed to earn a fixed interest rate.

It keeps money safe and provides liquidity.

Banks offer free financial advice.

It reduces the risk of currency devaluation.

Reviewed & Verified by Edzy Expert

Sandeep Chaturvedi

CBSE Social Science & Humanities Reviewer

Social science and humanities educator with 14+ years of experience reviewing CBSE SST, economics, commerce, arts, and vocational content.

Answer and Solution

B. It keeps money safe and provides liquidity.

People prefer to hold money as deposits in banks because it keeps their money safe while also allowing them to withdraw it easily when needed.

Watch Video Solution

Keep Practising

Students who asked this also explored

Continue with nearby questions to strengthen the same chapter concept while you still have the context fresh in mind.

Which of the following is a key characteristic of modern currency?

What does the term 'legal tender' mean in the context of money?

In a barter system, what problem does the double coincidence of wants create?

Why can't individuals legally refuse a payment made in the local currency in India?