Question

Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. The economist proposes the following relationship:P= A x MP= Price LeavelM= Money SupplyA = a composition of other factors, including real GDP, that change very slowly over time.How might an economist gather empirical data to test the proposed relationship between money and the price level?A. An economist would persuade the Federal Reserve to change the money supply to various levels, and observe the resulting changes in the price level.B. An economist would look for data on past changes in the money supply, and note the resulting changes in the price levelC. Economists do not usually develop theoretical models of the economy but only analyze summary statistics about the current state of the economy.D. Unlike researchers in the hard sciences, economists cannot study complex relationships using data.

Answer 1

The statement " An economist would look for data on past changes in the money supply, and note the resulting changes in the price level " is correct.

Explanation:

In the past, the knowledge economist will research price-money ties and observe trends; then analyse data, and establish the theory.

Financial experts analyse the market activity of economists. Their main responsibility includes the compilation and review of economic and socio-economic data, guidance on economic choices for companies and governments and the creation of models for economic predictions.

• Financial political and socio-economic data collection and review.
• Surveys and diverse sampling techniques are carried out.
• Researching different areas such as governance, economics, employment, electricity, etc.
• Using historical information. Market trends analysis.