ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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M1 assets cannot be converted easily into cash
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M1 assets are stored in savings accounts.
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M1 assets can be converted into cash easily.
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M1 assets do not have liquidity.
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Detailed explanation-1: -M1 includes the most liquid portions of the money supply because it contains currency and assets that either are or can be quickly converted to cash. However, “near money” and “near, near money, ” which fall under M2 and M3, cannot be converted to currency as quickly.
Detailed explanation-2: -The M1 money supply is the basic or the primary form of money that is defined as the most liquid money as it can be easily and quickly liquidated.
Detailed explanation-3: -M1 = coins and currency in circulation + checkable (demand) deposit + traveler’s checks.
Detailed explanation-4: -M1 consists of the most highly liquid assets. That is, M1 includes all forms of assets that are easily exchangeable as payment for goods and services. It consists of coin and currency in circulation, traveler’s checks, demand deposits, and other checkable deposits.