Praxis II: Economics Content Knowledge Exam Prep

Answer - D - Liquidity is the term for the ease with which an asset-typically money-can be converted into spending.

Key Takeaway: Remember that liquidity is the ease with which an asset, typically money, can be converted into spendable form. Credit cards are not considered to be a liquid asset and do not count as money that is within the money supply. Currency is considered to be extremely liquid, as it’s the easiest form of money to convert into spendable form. Checks and money in savings is considered less liquid.