Final answer:
The density of an object measured using the water displacement method should be reported with three significant figures, which is the same as the volume measurement.
Step-by-step explanation:
The number of significant figures in the density of an object can be determined based on the number of significant figures in the mass and volume measurements. In this case, the mass measurement has four significant figures, while the volume measurement has three significant figures. According to the rules of significant figures, the answer should be rounded to the same number of significant figures as the measurement with the least number of significant figures. Therefore, the density should be reported with three significant figures, which is the same as the volume measurement.