Q. Which of the following money component is least liquid of all money components?

[A] M1

[B] M1 and M2

[C] M3

[D] M4

Answer: D

Explanation: M1 and M2 are known as narrow money. M3 and M4 are known as broad money.

  • These measures are in decreasing order of liquidity.
  • M1 is most liquid and easiest for transactions whereas M4 is least liquid of all.
  • M3 is the most commonly used measure of money supply. It is also known as aggregate monetary resources.

Source: NCERT – Indian Economy