Final answer:
A cashier's check is a check drawn by a bank on its own funds, making it a secure payment method distinct from personal checks or certified checks. This financial tool is one of the ways banks facilitate transactions in a complex economy, alongside methods like direct withdrawals and debit cards.
Step-by-step explanation:
The correct answer to the student's question is A) Cashier's check. A cashier's check is a check that is drawn by the bank on its own funds and signed by an authorized bank official. Unlike personal checks, which are drawn on the funds in an individual's account, a cashier's check is guaranteed by the bank's funds, which makes it a secure form of payment. When you use a cashier's check, the bank is responsible for paying the amount specified on the check to the payee. In comparison, a certified check is a personal check that has been certified by the bank, indicating that there is enough money in the account to cover the check. A personal check is written by an individual and draws money from their personal account. A money order is a payment order for a pre-specified amount of money that resembles a check and is used by people who do not have a bank account.
Banks facilitate a wide range of transactions in various markets by enabling people and businesses to store money and make payments through various methods such as direct withdrawals, writing checks, or using debit cards. These tools help to make economic transactions smoother and less reliant on cash exchanges.