Respuesta :
Higher interest rates are a trade‐off for lower liquidity meaning, if you choose an account with a higher interest rate to earn more money, you have a smaller chance for liquidity.
A checking and savings account typically have a lower interest rate but you have a larger chance for liquidity (spendability). With something like a certificate of deposit, you have a higher interest rate but less options with regards to spending.
A checking and savings account typically have a lower interest rate but you have a larger chance for liquidity (spendability). With something like a certificate of deposit, you have a higher interest rate but less options with regards to spending.
"Higher interest rates are a trade‐off for lower liquidity" describes that when a higher rate of interest is paid by an individual then it would yield him with less cash in hand or less liquidity status.
The banks provide different options to customers in terms of higher or lower interest rates. If the customer has savings or a current account then its interest rate is less but the customers have high liquidity as they may withdraw cash easily anytime.
However, banks attach higher interest rates with certificates of deposits but customers cannot encash it easily which restricts their liquidity.
Learn about tradeoffs here:
https://brainly.com/question/10895386
