10.7 In Example 10.4, we wrote the model that explicitly contains the long-run propen- sity, 60, as gfr, = a + ope, + 8(pe-1 - pe,) + 2(pe-2-pe,) + u,, where we omit the other explanatory variables for simplicity. As always with multiple regression analysis, 0, should have a ceteris paribus interpretation. Namely, if pe, increases by one (dollar) holding (pe,-1-pe,) and (pe,-2-pe,) fixed, gfr, should change by 00. (i) If (pepe,) and (pe,-2-pe,) are held fixed but pe, is increasing, what must be true about changes in pe, and pe,-2? (ii) How does your answer in part (i) help you to interpret 6, in the above equation as the LRP?