Arrange the following money measures into their high to low liquid form.
(A) M4
(B) M2
(C) M1
(D) M3
Choose the correct answer from the options given below:
Arrange the following money measures into their high to low liquid form.
(A) M4
(B) M2
(C) M1
(D) M3
Choose the correct answer from the options given below:
Solution
Option 1 -> Arranges as M4, M2, M1, M3 which is incorrect order of liquidity.
Option 2 -> Arranges as M4, M1, M2, M3 which starts with least liquid measure.
Option 3 -> Arranges as M2, M4, M3, M1 which is completely incorrect order.
Option 4 -> Arranges as M1, M2, M3, M4 which correctly represents high to low liquidity.
Hence, Option 4: (C), (B), (D), (A) -> Money supply measures in order of liquidity are: M1 (most liquid - includes currency in circulation and demand deposits), M2 (M1 + savings deposits with Post Office), M3 (M2 + time deposits with banks), and M4 (least liquid - M3 + all Post Office deposits excluding NSC). Each successive measure includes the previous one plus additional less liquid components. -> correct
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