What does liquidity refer to?
A) the relation between the price and interest rate of an asset
B) the risk of an asset relative to its selling price
C) the ease with which an asset is converted into a medium of exchange
D) the sensitivity of investment spending to changes in the interest rate

Question

Quizplus · Accepted Answer

Liquidity refers to the ease with which an asset can be converted into a medium of exchange, such as cash or other liquid assets that can be used to purchase goods and services. The more liquid an asset is, the easier it is to sell it quickly without losing its value. The other options are related to different concepts, such as price-interest rate relation, risk, and investment spending sensitivity.

What Does Liquidity Refer To