A Study Has Estimated the Effect of Changes in Interest

question 107

Multiple Choice

A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: ln M = 14.666 + .021 ln C − 0.036 ln r,where M denotes real money balances,C is an index of consumer confidence,and r is the interest rate paid on bank deposits.Based on this study we know that the interest elasticity is:

• A) unitary.
• B) zero.
• C) very elastic.
• D) very inelastic.

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Definitions:

Structural Integration

The organization and alignment of various components of a system or organization to ensure they function together effectively.

Culture-Group Biases

The inclination to make judgments based on the norms, values, and practices of one's own cultural or ethnic group, often at the expense of understanding or appreciating others.

Pluralistic Differentiation

The process of acknowledging and catering to a wide range of diversities within a society, implying an emphasis on inclusivity and respect for differences.

Structural Integration

The process of organizing the components of a system (e.g., an organization) so that they work together effectively.