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
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 US consumption and disposable income Consumption and Income, respectively, in $ for the years
a Find the sample regression equation for the model: Consumption betabeta Income varepsilon
b In this model, the slope coefficient is called the marginal propensity to consume. Interpret its meaning.
c Construct and interpret the confidence interval for mean consumption if disposable income is $
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