Give typing answer with explanation and conclusion A standard "money demand" function used by macroeconomists has the form ln(m)=β0+β1ln(GDP)+β2R, Where m is the quantity of (real) money, GDP is the value of (real) gross domesticproduct, and R is the value of the nominal interest rate measured in percent per year. Supposed that β1 = 2.66 and β2 = −0.05. A) What is the expected change in m if GDP increases by 4%? The value of m is expected to_________(increase or decrease ) by approximately ________% (Round your response to the nearest integer) B) What is projected to change in m if the interest rate increases form 2% to 6% ? The value of m is expected to ________(increase/decrease) by approximately ________% (Round your response to the nearest integer)
Give typing answer with explanation and conclusion
A standard "money demand" function used by macroeconomists has the form
ln(m)=β0+β1ln(GDP)+β2R,
Where m is the quantity of (real) money, GDP is the value of (real) gross domesticproduct, and R is the value of the nominal interest rate measured in percent per year. Supposed that β1 = 2.66 and β2 = −0.05.
A) What is the expected change in m if GDP increases by 4%?
The value of m is expected to_________(increase or decrease ) by approximately ________%
(Round your response to the nearest integer)
B) What is projected to change in m if the interest rate increases form 2% to 6% ?
The value of m is expected to ________(increase/decrease) by approximately ________%
(Round your response to the nearest integer)
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