Question

Which of the following statements is true?

Options

• M₁ is the most liquid measure of money supply

• M₂ is the most liquid measure of money supply.

• M₃ is the most liquid measure of money supply

• All the statements are true.

Answer 1

M₁ is the most liquid measure of money supply

Explanation:

All assets that are easily exchangeable as payment for goods and services are included in M₁. It comprises circulating coins and currency, as well as demand deposits, which are used to pay for goods and services.