The following table gives estimated coefficients for the equation you identified in the previous question:

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter13: Inflation
Section: Chapter Questions
Problem 12SQ
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log(MDMD / P) = α + (β x i) + [γ x log(Y)] + ε
The following table gives estimated coefficients for the equation you identified in the previous question:
Coefficient
Value
α 0.10
β –0.15
γ 0.5
 
If the nominal interest rate rises by 4 percentage points and income rises by 2 percentage points, then ignoring the error term, the quantity of real money demanded changes by ( 10%/-15%/12%/16%)   .
 
Based on the table, the elasticity of the real money demanded with respect to income is .........
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