Money Banking

Consider the following liquid assets:

  • 1. Demand deposits with the banks
  • 2. Time deposits with the bank
  • 3. Savings deposits with the bank
  • 4. Currency

The correct sequence of these assets in the decreasing order of liquidity is

  1. 4-3-2-1
  2. 1-4-3-2
  3. 4-1-3-2
  4. 2-3-1-4

Answer

Liquidity describes how easy it is to convert assets to cash. The most liquid asset, and what everything else is compared to, is cash or currency. This is because it can always be used easily and immediately.

The correct option is C.