Final answer:
Cash is the form of money that is immediately available to be spent, which is highly liquid. Other forms like checks or credit cards have liquidity but require additional steps to be used for purchases, unlike cash. Liquidity measures the ease with which financial assets can be used for transactions.
Step-by-step explanation:
Money that is immediately available to be spent is called cash. When we talk about cash, we often think of physical currency like paper bills and coins, which is the most liquid form of money. Liquidity is a crucial concept in economics, referring to how quickly you can use a financial asset to buy a good or service. Cash is considered highly liquid because it can be directly used to purchase what you need without additional steps. On the other hand, assets like checks or credit cards, while still forms of money, are not as liquid as cash. For instance, funds in your savings account are less liquid; you must go to an ATM machine or bank to withdraw cash before you can spend it on your lunch. Understanding the varying levels of liquidity helps in differentiating between cash and other financial assets.