ECON 111 TEST 3 QUESTIONS AND CORRECT ANSWERS RATED A+ 2025/2026

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.