Explain why time deposits measures of M3 is less liquid than the deman

1.	Explain why time deposits measures of M3 is less liquid than the demand deposits measure of Mr.
Answer» 1. It is generally thought that time deposits with the banks are not as liquid as demand deposits, because the time deposits are not chequeable (i.e., these cannot be withdrawn through cheques drawn on them). 2. However, loans against these time deposits can be easily taken. Hence, they can be used in times of need. 3. Moreover, they can also be withdrawn at any time by forgoing some interest earned on them.

Explain why time deposits measures of M3 is less liquid than the demand deposits measure of Mr.

Answer»

1. It is generally thought that time deposits with the banks are not as liquid as demand deposits, because the time deposits are not chequeable (i.e., these cannot be withdrawn through cheques drawn on them).

2. However, loans against these time deposits can be easily taken. Hence, they can be used in times of need.

3. Moreover, they can also be withdrawn at any time by forgoing some interest earned on them.

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Explain why time deposits measures of M3 is less liquid than the demand deposits measure of Mr.

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