ECON 103 EVALUATION 2026 EXAM ALL
QUESTIONS AND ANSWERS SURE A+
✔✔Budget Surplus - ✔✔A financial situation where government revenues exceed
expenditures, allowing for savings or debt reduction.
✔✔Budget Deficit - ✔✔A financial situation where government expenditures exceed
revenues, leading to borrowing or increased debt.
✔✔The Market for Loanable Funds - ✔✔A theoretical market where savers supply
funds for loans to borrowers, determining the interest rate based on supply and
demand.
✔✔4 Assumptions of the Market for Loanable Funds - ✔✔1) All savers and borrowers
are rational, 2) The market is competitive, 3) There are no transaction costs, and 4)
Information is perfect.
✔✔2 Factors that Shift the Supply of Loanable Funds - ✔✔1) Changes in savings
behavior (e.g., increased savings rates), 2) Changes in government policies (e.g., tax
incentives for saving).
✔✔1 Factor that Shifts the Demand for Loanable Funds - ✔✔Changes in investment
opportunities, such as new business projects requiring financing.
, ✔✔Crowd-Out - ✔✔A phenomenon where increased government borrowing leads to a
reduction in private sector investment due to higher interest rates.
✔✔Money - ✔✔A medium of exchange that facilitates transactions for goods and
services.
✔✔3 Functions of Money - ✔✔Money serves as a medium of exchange, a unit of
account, and a store of value.
✔✔Medium of Exchange - ✔✔An intermediary instrument used to facilitate the sale,
purchase, or trade of goods between parties.
✔✔Unit of Account - ✔✔A standard numerical monetary unit of measure that provides a
consistent measure of value.
✔✔Store of Value - ✔✔An asset that can maintain its value over time and can be saved
and retrieved in the future.
✔✔Liquidity - ✔✔The ease with which an asset can be converted into cash without
affecting its market price.
✔✔2 Types of Money - ✔✔The two main types of money are commodity money and fiat
money.
✔✔Commodity Money - ✔✔Money that has intrinsic value, such as gold or silver, and
can be used for trade.
✔✔Fiat Money - ✔✔Currency that has no intrinsic value and is not backed by physical
commodities, but is established as money by government regulation.
✔✔Money Stock - ✔✔The total amount of money in circulation or in existence in an
economy at a particular time.
✔✔Items included in M1 Money Stock - ✔✔M1 includes physical currency, demand
deposits, traveler's checks, and other liquid assets.
✔✔Items included in M2 Money Stock - ✔✔M2 includes all of M1 plus savings
accounts, time deposits, and other near-money assets.
✔✔The Federal Reserve - ✔✔The central banking system of the United States,
responsible for implementing monetary policy and regulating banks.
QUESTIONS AND ANSWERS SURE A+
✔✔Budget Surplus - ✔✔A financial situation where government revenues exceed
expenditures, allowing for savings or debt reduction.
✔✔Budget Deficit - ✔✔A financial situation where government expenditures exceed
revenues, leading to borrowing or increased debt.
✔✔The Market for Loanable Funds - ✔✔A theoretical market where savers supply
funds for loans to borrowers, determining the interest rate based on supply and
demand.
✔✔4 Assumptions of the Market for Loanable Funds - ✔✔1) All savers and borrowers
are rational, 2) The market is competitive, 3) There are no transaction costs, and 4)
Information is perfect.
✔✔2 Factors that Shift the Supply of Loanable Funds - ✔✔1) Changes in savings
behavior (e.g., increased savings rates), 2) Changes in government policies (e.g., tax
incentives for saving).
✔✔1 Factor that Shifts the Demand for Loanable Funds - ✔✔Changes in investment
opportunities, such as new business projects requiring financing.
, ✔✔Crowd-Out - ✔✔A phenomenon where increased government borrowing leads to a
reduction in private sector investment due to higher interest rates.
✔✔Money - ✔✔A medium of exchange that facilitates transactions for goods and
services.
✔✔3 Functions of Money - ✔✔Money serves as a medium of exchange, a unit of
account, and a store of value.
✔✔Medium of Exchange - ✔✔An intermediary instrument used to facilitate the sale,
purchase, or trade of goods between parties.
✔✔Unit of Account - ✔✔A standard numerical monetary unit of measure that provides a
consistent measure of value.
✔✔Store of Value - ✔✔An asset that can maintain its value over time and can be saved
and retrieved in the future.
✔✔Liquidity - ✔✔The ease with which an asset can be converted into cash without
affecting its market price.
✔✔2 Types of Money - ✔✔The two main types of money are commodity money and fiat
money.
✔✔Commodity Money - ✔✔Money that has intrinsic value, such as gold or silver, and
can be used for trade.
✔✔Fiat Money - ✔✔Currency that has no intrinsic value and is not backed by physical
commodities, but is established as money by government regulation.
✔✔Money Stock - ✔✔The total amount of money in circulation or in existence in an
economy at a particular time.
✔✔Items included in M1 Money Stock - ✔✔M1 includes physical currency, demand
deposits, traveler's checks, and other liquid assets.
✔✔Items included in M2 Money Stock - ✔✔M2 includes all of M1 plus savings
accounts, time deposits, and other near-money assets.
✔✔The Federal Reserve - ✔✔The central banking system of the United States,
responsible for implementing monetary policy and regulating banks.
