Math Problem Statement
The consumption function captures one of the key relationships in economics. It expresses consumption as a function of disposal income, where disposal income is income after taxes. The attached file “Regression Dataset” shows data on average US annual consumption (in $) and disposable income (in $) for the years 2000 to 2016.
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Find the sample linear regression equation for the model
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In this model, the slope coefficient is the marginal propensity to consume. Interpret its meaning
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What is the predicted consumption if disposal income is $33,000?
Solution
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Math Problem Analysis
Mathematical Concepts
Linear Regression
Regression Analysis
Marginal Propensity to Consume
Formulas
Linear Regression Equation
Theorems
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Suitable Grade Level
Undergraduate
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