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)

ENGR.ECONOMIC ANALYSIS
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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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