The relationship between the level of growth of an economic variable, gt, and its level, yt, is best approximated as
A) gt = $ \frac{y_{t}}{y_{t-1}} $
B) gt = log yt + log yt - 1.
C) log gt = yt - yt - 1.
D) gt = log yt - log yt - 1.
E) yt = log gt - log gt - 1.

Question

Quizplus · Accepted Answer

The formula for the level of growth of an economic variable is best approximated as the difference between the logarithm of the current level and the logarithm of the previous level. This can be expressed as:
gt = log yt - log yt-1
Therefore, the best choice is option D.

The Relationship Between the Level of Growth of an Economic ytyt−1 \frac{y_{t}}{y_{t-1}} yt−1​yt​​

The Relationship Between the Level of Growth of an Economic $\frac{y_{t}}{y_{t-1}}$