The propensity ?0 + ?1+ … + ?k is sometimes called the:?
A. ?short-run elasticity, which measures the percentage increase in a dependent variable after k quarters given a permanent 1% increase in the k independent variables.
B. ?long-run elasticity, which measures the percentage increase in a dependent variable after k quarters given a permanent 1% increase in the k independent variables.
C. ?short-run elasticity, which measures the percentage decrease in a dependent variable after k quarters given a permanent 1% decrease in the k independent variables.
D. ??long-run elasticity, which measures the percentage decrease in a dependent variable after k quarters given a permanent 1% decrease in the k independent variables.
Answer: B
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