Q.2: An economist who estimated the Keynesian money demand function in logarithmic form using data from Sri Lankan economy, obtained the graph on the left by using predicted and actual money demand. While the model was very successful in predicting money demand until 2010 (small forecast errors), it predicts a consistently higher money demand than actually occurred since then (growing forecast errors each period). 4 Ln(M) 4.75 4.7 4.65 4.6 4.55 Actual 4.5 Predicted 4.45 Help this economist who has trouble explaining this situation, even if you do not know anything about the economy in question. stor stor otor Soo

Q.2: An economist who estimated the Keynesian money demand function in logarithmic form using data from Sri Lankan economy, obtained the graph on the left by using predicted and actual money demand. While the model was very successful in predicting money demand until 2010 (small forecast errors), it predicts a consistently higher money demand than actually occurred since then (growing forecast errors each period). 4 Ln(M) 4.75 4.7 4.65 4.6 4.55 Actual 4.5 Predicted 4.45 Help this economist who has trouble explaining this situation, even if you do not know anything about the economy in question. stor stor otor Soo

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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What is Use a naive method to make a forecast?
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