Question

consider the following regression

ln(GDP) = 4.68 + 1.5 (M2V) + 0.0007 saving

where GDP = Gross National Product

M2V = velocity of money

Saving = National Saving

choose the correct interpretation of the coefficient of debt

		if M2V increase by 1 unit, GDP will increase by 1.5 units, assuming all other variables remain constant.
		if M2V increases by 1 unit, GDP will increase by 1.5%, assuming all other variables remain constant.
		if M2V increases by 1 unit, GDP will increase by 150%, assuming all other variables remain constant.
		if M2V increases by 1% unit, GDP will increase by 1.5%, assuming all other variables remain constant.

Answer 1

Ans is B

when variable is in simple form then value changes by 1 unit

If variable is given in log form then value changes in percentage

thus if M2V increases by 1 unit then GDP will increase by 1.5%