One Reason for Computing the Logarithms (Ln), or Changes in Logarithms

question 15

Multiple Choice

One reason for computing the logarithms (ln) , or changes in logarithms, of economic time series is that

• A)numbers often get very large.
• B)economic variables are hardly ever negative.
• C)they often exhibit growth that is approximately exponential.
• D)natural logarithms are easier to work with than base 10 logarithms.

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Definitions:

Payoff

The return or benefit received from a particular action or investment, often used in the context of game theory and economics.

Pure Strategy Equilibria

A scenario in game theory where each player chooses one strategy, and no player can benefit by changing strategies while the other players keep their strategies unchanged.

Swerve

To change direction abruptly, often used in driving contexts to avoid an obstacle or collision.

Drive Straight

The action or process of moving a vehicle forward in a direct line without turning.