One reason for computing the logarithms (ln), or changes in logarithms, of economic time series is that
A)numbers often get very large.
B)economic variables are hardly ever negative.
C)they often exhibit growth that is approximately exponential.
D)natural logarithms are easier to work with than base 10 logarithms.

Question

Quizplus · Accepted Answer

Economic time series often exhibit growth that is approximately exponential, meaning that the rates of change are proportional to the level of the variable. Taking logarithms can help to linearize the data and make it easier to analyze and interpret. Using natural logarithms (ln) is common because they have some mathematical properties that make them easier to work with compared to other logarithmic functions.

One Reason for Computing the Logarithms (Ln), or Changes in Logarithms