Consider the following regression:

M = 2.00–0.10 R + 0.70 Y + 0.60 M + e

(0.10) (0.35) (0.10) standard errors R = .9 DW = 1.80 n = 26 t t t t 1 t 2

where M is the demand for M1.

R is the interest rate on ten-year treasuries Y is national income

(A) Do the variables attain their expected signs?

(B) What is the short-run impact of the interest rate (R) on money demand (M)?

(C) What is the long-run impact?