What is liquidity
Liquidity refers to how easy it is to turn something into cash. For example, money held in your current account can be turned into cash more easily than your car, which in turn can be turned into cash more easily than your house.
If you needed to get cash out of your current account, you could probably get it within a few minutes or hours; if you needed to sell your car, you could probably do that within a few days; if you needed to sell your house, it would probably take several weeks or even months before you had your hands on the cash.
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