Liquidity increases as we move from the M1 to the M2 definition of the money supply.

Name: Liquidity increases as we move from the M1 to the M2 definition of the money supply.
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Quizplus · Accepted Answer

Liquidity decreases as we move from M1 to M2 because M1 includes cash and checking deposits which are more liquid, while M2 includes savings deposits, money market securities, and other time deposits which are less liquid than M1 components.

Liquidity Increases as We Move from the M1 to the M2