Economists studying the money supply categorize the status of the money based on liquidity.
Further Explanation:
Liquidity means an individual or company has adequate “liquid assets” to pay the “bills on time”. It can be possessions or cash that can be converted into ‘cash’ rapidly without losing a “substantial amount” of their value.
In other words, it is sufficient cash in an individual’s hand to meet his/her responsibilities. “Liquid assets” can be property or cash that can quickly be converted to ‘cash’ without “substantial loss” in value. To maintain liquidity above the ‘bare minimum’ is usually considered wise “to guard” against unexpected expenses. The common types of “liquid assets” for business (from “banks” to “electronic’ manufacturers”) are cash deposits in “checking and savings accounts” and marketable securities.
Fixed or illiquid assets are “possessions of value” that are held ‘long-term’, such as land, home, or equipment.
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Answer Details:
Grade: High School
Chapter: Liquidity
Subject: Social Studies
Keywords:
liquidity, liquid assets, possessions, substantial amount, expenses, saving accounts, equipment, electronic manufcaturers
