Econ 110 Exam 3 COMPLETE EXAM LATEST
VERSION 2026-2027 QUESTIONS AND ANSWERS
Which of the following is a true statement about the multiplier?
A. the multiplier rises as the MPC rises
B. the smaller the MPC, the larger the multiplier
C. the multiplier is a value between zero and one
D. the multiplier effect does not occur when autonomous expenditure decreases - answer>>A. the
multiplier rises as the MPC rises
John Maynard Keynes argues that if many households decide at the same time to increase saving and
reduce saving,
A. this may benefit the economy in the short-run, but not in the long-run
B. the economy will benefit in the short-run and benefit by an even greater amount in the long-run
C. this will have a major negative impact on the economy in both short-run and long-run
D. this may benefit the economy in the long-run, but could be counterproductive in the short run -
answer>>D. this may benefit the economy in the long-run, but could be counterproductive in the
short run
In economics, money is defined as
A. the goal value of one's assets in current prices
B. the goal value of one's assets minus the total value of one's debts, in current year prices
C. the total amount of salary, interest, and rental income earned during a year
D. any asset people generally accept in exchange for goods and services - answer>>D. any asset people
generally accept in exchange for goods and services
Which of the following is one of the most important benefits of money in an economy?
A. money allows for the exchange of goods and services
, B. money allows for the accumulation of wealth
C. money makes exchange easier, leading to more specialization and higher productivity
D. money encourages people to produce all of their own goods (self-sufficient) and therefore increases
economic stability - answer>>C. money makes exchange easier, leading to more specialization and
higher productivity
Which of the following functions of money would be violated if inflation were high?
A. unit of account
B. store of value
C. certificate of gold
D. medium of exchange - answer>>B. store of value
The Federal Reserve's narrowest definition of the money supply is
A. M0
B. M1
C. M2
D. M3 - answer>>B. M1
Currency $1,000
Checking account balances $2,000
Savings account balances $5,000
Small-denomination time deposits $6,000
Non-institutional money market fund shares $7,000
M2 in this simple economy equals,
A. $3,000
B. $8,000
C. $14,000
D. $21,000 - answer>>D. $21,000
VERSION 2026-2027 QUESTIONS AND ANSWERS
Which of the following is a true statement about the multiplier?
A. the multiplier rises as the MPC rises
B. the smaller the MPC, the larger the multiplier
C. the multiplier is a value between zero and one
D. the multiplier effect does not occur when autonomous expenditure decreases - answer>>A. the
multiplier rises as the MPC rises
John Maynard Keynes argues that if many households decide at the same time to increase saving and
reduce saving,
A. this may benefit the economy in the short-run, but not in the long-run
B. the economy will benefit in the short-run and benefit by an even greater amount in the long-run
C. this will have a major negative impact on the economy in both short-run and long-run
D. this may benefit the economy in the long-run, but could be counterproductive in the short run -
answer>>D. this may benefit the economy in the long-run, but could be counterproductive in the
short run
In economics, money is defined as
A. the goal value of one's assets in current prices
B. the goal value of one's assets minus the total value of one's debts, in current year prices
C. the total amount of salary, interest, and rental income earned during a year
D. any asset people generally accept in exchange for goods and services - answer>>D. any asset people
generally accept in exchange for goods and services
Which of the following is one of the most important benefits of money in an economy?
A. money allows for the exchange of goods and services
, B. money allows for the accumulation of wealth
C. money makes exchange easier, leading to more specialization and higher productivity
D. money encourages people to produce all of their own goods (self-sufficient) and therefore increases
economic stability - answer>>C. money makes exchange easier, leading to more specialization and
higher productivity
Which of the following functions of money would be violated if inflation were high?
A. unit of account
B. store of value
C. certificate of gold
D. medium of exchange - answer>>B. store of value
The Federal Reserve's narrowest definition of the money supply is
A. M0
B. M1
C. M2
D. M3 - answer>>B. M1
Currency $1,000
Checking account balances $2,000
Savings account balances $5,000
Small-denomination time deposits $6,000
Non-institutional money market fund shares $7,000
M2 in this simple economy equals,
A. $3,000
B. $8,000
C. $14,000
D. $21,000 - answer>>D. $21,000
