We saw that households in the UK hold M1 in relation to nominal GDP of about 0.20 in 2015. Suppose the functionk(i)is well-described by the formk(i)= 0,2/i whereiis the nominal interest rate in percent and the interest rate for short-term nonmoney bank deposits (the opportunity cost for holding M1) is 1%. SUppose that in the next few years the nominal interest rate rises to 4%. What is the resulting demand for money (as a fraction of GDP)? What is the elasticity of the demand for money, measured in terms of the observed change in interest rates?