at martinez company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks. each signer has access to unissued checks kept in an unlocked file cabinet. the purchasing agent pays all bills pertaining to goods purchased for resale. prior to payment, the purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendor’s invoice. after payment, the invoice is filed by vendor name and the purchasing agent records the payment in the cash disbursements journal. the treasurer pays all other bills following approval by authorized employees. after payment, the treasurer stamps all bills "paid," files them by payment date, and records the checks in the cash disbursements journal. martinez company maintains one checking account that is reconciled by the treasurer.

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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

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