Question

If a change in government regulations allows banks to start paying interest on checking accounts, this will: increase the demand for currency but decrease the demand for checking accounts. decrease the demand for money. increase the demand for money. have no effect on the demand for money.

Answer 1

Increase the demand for money

Step-by-step explanation:

A checking account also called demand accounts is one that allows limitless withdrawals and deposits. It allows access through such means as checks, teller machines and electronic debits. They are very liquid accounts as opposed to savings accounts which may be limited in withdrawals

If government places interest on checking account, this would cause increase in demand for money as there would be need to hold liquid cash in the form of checking accounts that bring interests.

Answer 2

If a change in government regulations allows banks to start paying interest on checking accounts, It will decrease the demand for money.

Step-by-step explanation:

A checking account also called demand accounts or transnational accounts is a deposit account held at a financial institution that allows withdrawals and deposits.

Checking accounts are very liquid and can be accessed using checks, automated teller machines, and electronic debits, among other methods.

Therefore, if a change in government regulations allows banks to start paying interest on checking accounts, It will decrease the demand for money because people would want the money in their checking account to accrue interest.