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:

Nominal GDP

The value of the final goods and services produced in a given year valued at that year’s prices.

Velocity of Money

The speed at which currency is transferred from one deal to another and the frequency of usage of a currency unit within a specific timeframe.

Unemployment

The state of being without a job despite actively looking for work, usually measured as a percentage of the labor force.

PQ Remains Same

A situation in economic terms where the price level (P) and quantity (Q) of goods and services in the market stay unchanged over a period.