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Alika [10]
4 years ago
14

The term "liquidity" refers to

Social Studies
2 answers:
Gala2k [10]4 years ago
7 0

The correct answer is A) how quickly money can be exchanged.

The term "liquidity" refers to how quickly money can be exchanged.

When a company has "liquidity," it means that it has money to use immediately to use in whatever financial operation. For instance, a company has to pay some obligation at the end of the month but it has no "liquidity" because most of its investment is on gold or land. The company has to convert those investments to "liquid" form, cash, money in the bank account in order to use it and be exchanged.

Evgesh-ka [11]4 years ago
4 0

The term "liquidity" refers to how quickly money can be accessed or exchanged.

"Liquid" assets are those that flow freely. If a person or organization has certain amounts of cash on hand, those dollars are liquid and readily can be exchanged for assets or use to pay debts or make purchases. Liquid assets are investments or items that can quickly be exchanged for cash, converted into money that can be used to pay debts or make purchases.

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Group polarization is when a group which shares similar attitudes work together towards intensifying those attitudes more than they did when they had these ideas separately as individuals. Some intensified shared ideas may be risky such as when unrulyb mob gangs comes together to push their attitudes.

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4 years ago
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The monetary policy is the economic policy used by the central bank to control the supply of money or to mop up the excess liquidity in the economy in order to achieve the objective of controlling inflation in the economy through the use of the following monetary policy instruments

Open market operation : This is used when the central bank feels that the money in circulation is too little and wants to increase it, the bank will buy treasury bill from the commercial banks and give the commercial banks money. This will increase the money in circulation. But if the central bank feels that the money in circulation is too much and it wants to withdraw some, then the central bank sells treasury bill to the commercial banks and collect money from commercial banks this will decrease the money in circulation

Bank Rate : The bank rate determined the interest rate charged by banks on its loan. If the bank rate is high, the interest rate charged by commercial banks will be high.this will discourage the people from taken loan from the bank. But when the central bank reduces the bank rate, this will also make the interest rate to be low which will encourage the people to borrow from the commercial banks.

Cash Reserves : All commercial banks are expected to keep a certain percentage of their total deposit with the central bank. If the cash deposit ratio is increased the quantity of money left for commercial banks to lend out is reduced, but if the cash deposit ratio is reduced, then the quantity of money left for commercial banks to lend out is increased.

The Directives : The central bank may give central directives to commercial banks which they must follow, for example the central bank may ask the commercial banks to give credit for agricultural and industrial expansion. This will be the immediate channels to which credit may be directed.

Special Deposits : If the central bank is so pressed and decides to decrease credit facilities or the availability of loans it may ask the commercial banks to keep special deposits with it.This is done to contract credit only.when special deposit are kept with the central bank the amount of money left with the commercial banks is reduced and this reduces their ability to give loans.

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