14 Which of the following statements is TURE of the money de

14. Which of the following statements is TURE of the money demand model given above? a. + ln represents the deterministic component. b. +Aln,+7R, is the explained component. c, + ln , + u, represent both the explained and unexplained component. d. All statements are TRUE. e. b and c statements are TRUE

Solution

The correct option is d, because a) is true because it does not contain the error term so is the detrministic component. c) is true because it contains both the explanatory variables and the error term. .