Question: 8 . FILE Consumption. The consumption function, first developed by John Maynard Keynes, captures one of the key relationships in economics. It expresses consumption as

8. FILE Consumption. The consumption function, first developed by John Maynard Keynes, captures one of the key relationships in economics. It expresses consumption as a function of disposable income, where disposable income is income after taxes. The accompanying data file shows quarterly U.S. consumption and disposable income (Consumption and Income, respectively, in \$) for the years 2000-2019.
a. Find the sample regression equation for the model: Consumption \(=\beta_{0}+\beta_{1}\) Income \(+\varepsilon \).
b. In this model, the slope coefficient is called the marginal propensity to consume. Interpret its meaning.
c. Construct and interpret the \(95\%\) confidence interval for mean consumption if disposable income is \$15,000.
8 . FILE Consumption. The consumption function,

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!