Interest Rate Deregulation In an article on interest rate deregulation, Chris to fi and Agapos 3...

Interest Rate Deregulation In an article on interest rate
deregulation, Chris to fi and Agapos^{3 }arrive at the equation

where r is the deposit rate paid by commercial banks, rL
is the rate earned by commercial banks, C is the administrative cost of
transforming deposits into return-earning assets, and D is the savings deposit
level. Christofi and Agapos state that

Where is the deposit elasticity with respect to
the deposit rate. Express Equation (3) in terms of η to verify Equation
(4).