Suppose That We Are Comparing Results in the Following Two

Suppose that we are comparing results in the following two models
Model A: Y_it = 0.9Y_i,t-1 + 2X_1it
Model A: Y_it = 0.8Y_i,t-1 + 2X_1it
Which of the following is true?

A) The long-term effect of a one unit change in X will be 10 times bigger in Model A than in Model
B) The long-term effect of a one unit change in X will be 10 percent bigger in Model A than in Model
C) The short-term effect of a one unit change in X will be bigger in Model A than in Model
D) The short-term effect of a one unit change in X will be smaller in Model A than in Model

Correct Answer:

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