Which of the Following Is Generally a Highly Liquid Instrument

question 9

Multiple Choice

Which of the following is generally a highly liquid instrument?

• A) A bank bill
• B) A certificate of deposit
• C) Neither a bank bill nor a certificate of deposit
• D) Both bank bills and certificates of deposit are liquid instruments

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Definitions:

Marginal Propensity

This term explains the tendency of an individual or household to spend an additional unit of currency. For example, the marginal propensity to consume indicates how much consumption will increase with an additional dollar earned.

Disposable Income

The residual financial resources for households to use in saving and spending post paying income taxes.

Savings Rate

The Savings Rate is the percentage of income that is not spent on consumption but instead saved for future expenses, investments, or emergencies.

Social Security

A government program that provides financial assistance to people with inadequate or no income, especially the elderly and disabled.