Econ 111 exam 3 questions with
verified answers rated A+ 2025/2026
medium of exchange - correct answer ✔✔an item that buyers give to sellers when they want to
purchase goods and services
unit of account - correct answer ✔✔the yardstick that people use to post prices and record
debts
store of value - correct answer ✔✔an item that people can use to transfer purchasing power
from the present to the future
liquidity - correct answer ✔✔the ease with which an asset can be converted to the economies
medium of exchange
commodity money - correct answer ✔✔money that takes the form of a commodity with
intrinsic value
fiat money - correct answer ✔✔money without intrinsic value that is used as money because of
government decree
demand deposits - correct answer ✔✔balances in bank accounts that depositors can access on
demand by writing a check
Federal Reserve (Fed) - correct answer ✔✔the central bank of the united states
, central bank - correct answer ✔✔an institution designed to oversee the banking system and
regulate the quantity of money in the economy
monetary policy - correct answer ✔✔the setting of the money supply by policymakers in the
central bank
reserves - correct answer ✔✔deposits that banks have received but have not loaned out
fractional-reserve banking - correct answer ✔✔a banking system in which banks hold only a
fraction of deposits as reserves
reserve ratio - correct answer ✔✔the fraction of deposits that banks hold as reserves
money multiplier - correct answer ✔✔the amount of money that each banking system
generates with each dollar of reserves
bank capital - correct answer ✔✔the resources a banks owners have put into the institution
leverage - correct answer ✔✔the use of borrowed money to supplement existing funds for
purposes of investment
leverage ratio - correct answer ✔✔the ratio of assets to bank capital
capital requirement - correct answer ✔✔a government regulation specifying a minimum
amount of bank capital
open-market operations - correct answer ✔✔the purchase and sale of US government bonds by
the fed
verified answers rated A+ 2025/2026
medium of exchange - correct answer ✔✔an item that buyers give to sellers when they want to
purchase goods and services
unit of account - correct answer ✔✔the yardstick that people use to post prices and record
debts
store of value - correct answer ✔✔an item that people can use to transfer purchasing power
from the present to the future
liquidity - correct answer ✔✔the ease with which an asset can be converted to the economies
medium of exchange
commodity money - correct answer ✔✔money that takes the form of a commodity with
intrinsic value
fiat money - correct answer ✔✔money without intrinsic value that is used as money because of
government decree
demand deposits - correct answer ✔✔balances in bank accounts that depositors can access on
demand by writing a check
Federal Reserve (Fed) - correct answer ✔✔the central bank of the united states
, central bank - correct answer ✔✔an institution designed to oversee the banking system and
regulate the quantity of money in the economy
monetary policy - correct answer ✔✔the setting of the money supply by policymakers in the
central bank
reserves - correct answer ✔✔deposits that banks have received but have not loaned out
fractional-reserve banking - correct answer ✔✔a banking system in which banks hold only a
fraction of deposits as reserves
reserve ratio - correct answer ✔✔the fraction of deposits that banks hold as reserves
money multiplier - correct answer ✔✔the amount of money that each banking system
generates with each dollar of reserves
bank capital - correct answer ✔✔the resources a banks owners have put into the institution
leverage - correct answer ✔✔the use of borrowed money to supplement existing funds for
purposes of investment
leverage ratio - correct answer ✔✔the ratio of assets to bank capital
capital requirement - correct answer ✔✔a government regulation specifying a minimum
amount of bank capital
open-market operations - correct answer ✔✔the purchase and sale of US government bonds by
the fed
