5 In the linear consumption function cons = Bo + Binc, the (estimated) marginal propensity to consume (MPC) out of income is simply the slope, B, while the average propensity to consume (APC) is cons/inc = Bolinc + ßj. Using observations for 100 families on annual income and consumption (both measured in dollars), the following equation is obtained: cons = -124.84 + 0.853 inc n = 100, R? = 0.692. (i) Interpret the intercept in this equation, and comment on its sign and magnitude. (ii) What is the predicted consumption when family income is $30,000? (iii) With inc on the x-axis, draw a graph of the estimated MPC and APC.
5 In the linear consumption function cons = Bo + Binc, the (estimated) marginal propensity to consume (MPC) out of income is simply the slope, B, while the average propensity to consume (APC) is cons/inc = Bolinc + ßj. Using observations for 100 families on annual income and consumption (both measured in dollars), the following equation is obtained: cons = -124.84 + 0.853 inc n = 100, R? = 0.692. (i) Interpret the intercept in this equation, and comment on its sign and magnitude. (ii) What is the predicted consumption when family income is $30,000? (iii) With inc on the x-axis, draw a graph of the estimated MPC and APC.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
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Problem 1P
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Transcribed Image Text:5 In the linear consumption function
cons = Bo + Binc,
the (estimated) marginal propensity to consume (MPC) out of income is simply the slope, B,
while the average propensity to consume (APC) is cons/inc = Bolinc + ßj. Using observations
for 100 families on annual income and consumption (both measured in dollars), the following
equation is obtained:
cons = -124.84 + 0.853 inc
n = 100, R? = 0.692.
(i) Interpret the intercept in this equation, and comment on its sign and magnitude.
(ii) What is the predicted consumption when family income is $30,000?
(iii) With inc on the x-axis, draw a graph of the estimated MPC and APC.
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