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Why is the velocity of money higher when money stock is measured by M1 rathen than...

Why is the velocity of money higher when money stock is measured by M1 rathen than M2?
a) M2 is more liquid and easily transferable than M1.
b) M1 is more liquid and easily transferable ghan M2.
c) M1 includes only savings accounts whereas M2 also includes checking accounts.
d) M2 includes gold and silver whereas M1 also includes checking accounts.
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Answer #1

Why is the velocity of money higher when money stock is measured by M1 rather than M2?

b)M1 is more liquid and easily transferable than M2

(Velocity of money is the number of times money is circulated from one transaction to another.It measures how much unit of currency is used.As we know M1 is the most liquid form of money thus velocity of money is higher when stock is measured by M1 than by M2. Being most liquid M1 money can easily be used in more transactions thus increasing the velocity of money)

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