Assume that the required reserve ratio is 5 percent. if a commercial bank has $2 million cash in its vault, $1 million in government securities, $3 million on deposit at the fed, and $60 million in checkable deposits, then its excess reserves equal:
(a) 0 million
(b) 2 million
(c) 5 million
(d) 6 million

Assume the government imposes a $2.25 tax on suppliers, which results in a shift of the supply curve from s1 to s2. the price the seller receives for the product after paying the tax is

Agood for which demand increases as income rises is and a good for which demand increases as income falls is

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 m - p=price level - m=money supply - a=a composite 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? an economist would persuade the federal reserve to change the money supply to various levels, and observe the resulting changes in the price level. unlike researchers in the hard sciences, economists cannot study complex relationships using data. economists do not usually develop theoretical models of the economy but only analyze summary statistics about the current state of the economy. an economist would look for data on past changes in the money supply, and note the resulting changes in the price level