Question: Empirical Problem 1: you will derive a consumption function for australia. a. Go to the Penn World Tables (http://rug.nl/ggdc/productivity/pwt). A) Click on penn World table

Empirical Problem 1: you will derive a consumption function for australia.

a. Go to the Penn World Tables (http://rug.nl/ggdc/productivity/pwt). A) Click on "penn World table" and then click on "excel" to download the most current penn World table file. Open the resulting file in excel and find australian data for:

rgdpan: Real GDP at constant 2011 national prices (in mil. 2011US$)

rconna: Real consumption at constant 2011 national prices (in mil. 2011US$)

b. make a scatterplot that has real Gross Domestic Income per capita on the X axis and total Consumption per capita on the Y axis. What is the relationship between consump-tion and income in australia? Visually, on average by how much would an increase of aU$10 billion in income affect consumption? Using your answer, compute the marginal propensity to consume for australia.

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