10 Answers
The most liquid portions of the money supply are measured by M1 because it contains currency and assets that can be quickly converted to cash. "Near money" and "near, near money," which fall under M2 and M3, cannot be converted to currency as quickly.
Liquid assets include cash and all other assets which can be converted into cash at a very short notice. These are the assets which can be disposed of quickly. They are also called quick assets. For example, cash in hand, cash at bank, shares etc.
The most liquid portions of the money supply are measured by M1 because it contains currency and assets that can be quickly converted to cash. "Near money" and "near, near money," which fall under M2 and M3, cannot be converted to currency as quickly