Question

15. Which is the LEAST liquid asset?

A) currencies

B) checkable deposits

C) small-time deposits

D) savings deposits

25. The money multiplier is the amount the:

A) money supply can potentially expand with each dollar increase in reserves.

B) money supply can potentially expand with each dollar increase in deposits.

C) reserves expand with each dollar increase in deposits.

D) deposits expand with each dollar increase in reserves.

28. When banks borrow from the Fed:

A) they pay an interest rate called the Federal Funds rate.

B) interest rates rise.

C) it decreases the availability of banks to extend new loans.

D) it increases the money supply

39. The major tools that the Fed uses to control the money supply include

A) controlling the amount of government spending.

B) discount rate lending.

C) open market operations.

D) discount rate lending and open market operations.

Answer 1

Lioquid asset are those things that can be easily converted into cash. All those type of assets that can be sold with little impact on its value.

As the money of the checkable deposit which is s a type of demand deposit, can be withdrawn on demands. So it is a liquid asset. In other case the savings account is also a liquid asset which can be withdrawn on demand- i.e. can be easily converted into cash.

Currency or cash is those that are physically available or easily available- may be with the person or in his bank account

A time deposit is generally gives more interest than common savings account and there is a fixed maturity date of it. If the amount withdrawn pre-maturely the interest will not be available with the amount. There will be an impact on the value of it.

So, here all the four options are a liquid asset but considering the impact on value small time deposit should be least liquid.