ECON 111 TEST 3 QUESTIONS AND
CORRECT ANSWERS RATED A+
2025/2026
_____ are included in M1.
a. Money market deposit accounts
b. Certificate of deposits
c. Credit limits in Discover credit cards
d. Checking accounts - correct answer ✔✔d.
Why are shares in retail money market mutual funds NOT considered part of the M1 money
supply?
a. The funds do not provide a store of value.
b. The funds are not measured in a standardized unit of measure.
c. The funds are too liquid.
d. The funds are not spendable as a medium of exchange. - correct answer ✔✔d.
The supply curve for loanable funds is:
a. positively sloped.
b. negatively sloped.
c. horizontal.
d. vertical. - correct answer ✔✔a.
Suppose the government implements a policy reducing the rewards earned by savers. In this
case, the _____ loanable funds shifts _____.
, a. supply of; left
b. supply of; right
c. demand for; left
d. demand for; right - correct answer ✔✔a.
Suppose the economy enters a recession and income falls more than the demand for loanable
funds. In this case, the supply of loanable funds shifts _____ and the equilibrium interest rate
_____.
a. left; rises
b. right; rises
c. left; falls
d. right; falls - correct answer ✔✔a.
Institutions that serve as the bridge between savers and borrowers are known as:
a. commercial banks.
b. credit unions.
c. financial intermediaries.
d. securities firms. - correct answer ✔✔c.
Checking deposits generally have a _____ return on investment than do certificates of deposit
because checking deposits are _____.
a. higher; less liquid
b. higher; more liquid
c. lower; less liquid
d. lower; more liquid - correct answer ✔✔d.
CORRECT ANSWERS RATED A+
2025/2026
_____ are included in M1.
a. Money market deposit accounts
b. Certificate of deposits
c. Credit limits in Discover credit cards
d. Checking accounts - correct answer ✔✔d.
Why are shares in retail money market mutual funds NOT considered part of the M1 money
supply?
a. The funds do not provide a store of value.
b. The funds are not measured in a standardized unit of measure.
c. The funds are too liquid.
d. The funds are not spendable as a medium of exchange. - correct answer ✔✔d.
The supply curve for loanable funds is:
a. positively sloped.
b. negatively sloped.
c. horizontal.
d. vertical. - correct answer ✔✔a.
Suppose the government implements a policy reducing the rewards earned by savers. In this
case, the _____ loanable funds shifts _____.
, a. supply of; left
b. supply of; right
c. demand for; left
d. demand for; right - correct answer ✔✔a.
Suppose the economy enters a recession and income falls more than the demand for loanable
funds. In this case, the supply of loanable funds shifts _____ and the equilibrium interest rate
_____.
a. left; rises
b. right; rises
c. left; falls
d. right; falls - correct answer ✔✔a.
Institutions that serve as the bridge between savers and borrowers are known as:
a. commercial banks.
b. credit unions.
c. financial intermediaries.
d. securities firms. - correct answer ✔✔c.
Checking deposits generally have a _____ return on investment than do certificates of deposit
because checking deposits are _____.
a. higher; less liquid
b. higher; more liquid
c. lower; less liquid
d. lower; more liquid - correct answer ✔✔d.
