Suppose that the United States enters a recession, and income falls by 2%.Use the regression in column (1) to predict the change in demand.The expected percentage change in demand is %. (Round your response to two decimal places.) Data tableTwo Stage Least Squares Estimatesof the Demand for Cigarettes Using Panel Data for 48 U.S. StatesDependent variable: InRegressorcigarettesi, 1995In(pi $)-Inpcigarettesi, 1995In (Inci, 1995) - In (Inci, 1985)InterceptcigarettesInstrumental variable(s)First-stage F-statisticOveridentifying restrictions J-testand p-value- Incigrattesi, 1985Q(1)-0.94**(0.21)0.53(0.34)-0.12(0.07)Sales tax33.70Print(2)-1.34**(0.23)0.43(0.30)-0.02(0.07)Cigarette-specific tax107.20(3)- 1.20**(0.20)0.46(0.31)-0.05(0.06)DoneBoth sales taxcigarette-specifThese regressions were estimated using data for 48 U.S. states (48 observations on the 10-year differencdata are described in Appendix 12.1. The J-test of overidentifying restrictions is described in Key Conceptp-value is given in parentheses), and the first-stage F-statistic is described in Key Concept 12.5. Individualcoefficients are statistically significant at the *5% level or **1% significance level.88.604.93(0.026)

Recession A large decrease in overall economic activity in a particular area is referred to as a…

Suppose that the United States enters a recession, and income falls by 2%. Use the regression in column (1) to predict the change in demand. The expected percentage change in demand is%. (Round your response to two decimal places.)

Suppose that the United States enters a recession, and income falls by 2%. Use the regression in column (1) to predict the change in demand. The expected percentage change in demand is%. (Round your response to two decimal places.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: QUESTION 3 This question explores some of the points discussed in Topic 3 (Romer model). It is also…

A: Operations Management Bentonville Brewing Company makes a variety of polychrome beers at the brewery…

Q: Express the states (|0) + |1))//z and (|0) – |1))/VI in a basis in which they are not the same up to…

A: In this question we have to find out the relative phase shift with the help of the above…

Q: A broad based increase in taxes will lead to A an increase in households' disposable income and will…

A: If the broad based taxes increase the disposable income of people will fall and they will be willing…

Q: This question repeats the exercise of Study Exercise 12, but for spe- cific numerical values. The…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: The economy is described by the following functions: C 120 + 0.8Y D %3D Tr 15 %3D Tr = 5 I = 50 – 5i…

A: 1. Equation of the IS curve is given by - Y = C + I + G + Nx Here, C = 120 + 0.8YD YD = Y - Tx…

Q: Suppose you want to study the relationship between city GDP and how many companies are operated by…

A: A regression model is a method in statistics that is used to assess the association between any…

Q: Suppose you are reading a magazine showing a figure that plots the U.S. GDP from 1900 to 2012 in…

A: GDP shown in 2005 chained dollars means that the real GDP is calculated with chain weighted price…

Q: A 1 Total Monthly Gross Income 2 Allowable Monthly Housing Expenditure 3 Total Non-Mortgage Housing…

A: Based on the information provided and the calculations required, the model will be presenting…

Q: Consider the following numerical example of the IS-LM model: C = 191 +0.49YD / = 155+0.24Y-1,168/ G…

A: Introduction Investment savings or IS and liquid money supply or LM are two terms that comprise the…

Q: QUESTION 3 This question explores some of the points discussed in Topic 3 (Romer model). It is also…

A: An economic model known as the Romer model outlines the factors that lead to technical advancement,…

Q: 5. Personal Income The following table shows the average annual income in the United States,…

A: Step 1:Create a table like this Step 2:Solve using the formulas involved a) Regression equationFrom…

Q: d. If P increases by 4%, what would happen (in percentage terms) to quantity demanded? e. If M…

A: Demand analysis deals with the estimation of demand/sales based on available historic data for the…

Q: The table gives disposable income (DI), consumption (C), and savings (S) data for the country of…

A: Disposable income is the income available with the household sector for the consumption purpose. The…

Q: A manager uses a trend equation plus quarterly relatives to predict demand. Quarter relatives are…

A: MAD=MEAN ABSOLUTE DEVIATION mean absolute deviation of a dataset is the average distance between…

Q: Provide an analysis for the below graph that I generated for the following question. What is the…

A: The trajectory GDP graph is the path of GDP which is moving under given force of action. Given The…

Q: The least-squares regression equation that shows the best relationship between demand and period is…

A: To find the least square regression equation for the given data, we need to perform some steps:Step…

Q: Q. Rubax, a U.S. manufacturer of athletic shoes, estimates the following linear trend model for show…

A: Given,

Q: Assume that you want to study the effect of an increase in minimum wages on unemployment rates using…

A: The Linear regression equation depicts the linear relationship between a dependent variable and the…

Q: 18. if we got the the following regression result Yi= -2.5- 10 (Xi) when the number of observation…

A: Given: Regression result; Yi=-2.5-10Xi Here; -2.5 represent intercept term Xi= independent variable…

Q: Consider following regressions: Y = a₁ + a₂X+U Y* =b₁ + b₂X* + V Where: Y = mY, X* =nX D Show that:…

A: Y = a1 + a2 X + U_____________[1] After scaling, regression: Y* = b1 + b2 X* + V mY = b1 + b2 (nX) +…

Q: The diagram shows what happened to the consumption of lamb in the UK over the period 1974– 2015. How…

A: The initial model fitted to the annual data for the years 1974 - 2014 is given by : (1).

Q: 9_If you want to estimate regression where sales is dependent and advert_expenditure is independent…

A: Regression refers to the statistical method used in finance, investing, and other disciplines that…

Q: Suppose sales for the past 6 months have been 100, 106, 87, 102, 87, and 104 Using a smoothing…

A: Suppose sales for the past 6 months have been 100,106,87,102,87,and 104 Here smoothing coefficient…

Q: Explain why the variables move together on this time trend.

A: Gross Domestic Product (GDP) is defined as the final value of all goods and services produced in an…

Q: Tucson Machinery, Incorporated, manufactures numerically controlled machines, which sell for an…

A: Given,QuarterLast YearQuantity(Units)Quarter(This Year)Quantity(Units)117116223229331333421420

Q: Consumer price index. The consumer price index com- pares the costs, c, of goods and services over…

A: The CPI is determined regarding a base year, which is utilized as a benchmark. The cost change…

Q: You are a junior executive of a new cellular phone carrier called Technologies of the Future (TOF)…

A: Disclaimer :- Since you asked multipart question, we are solving only first 3 parts as per…

Q: where t is the number of years after 1950 and L(t) is given in billions of dollars. Evaluate and…

A: Instantaneous rate of change is used to describe the rate at which a quantity is changing at a…

Q: Allowable Monthly Housing Expenditure otal Non-Mortgage Housing Expenses Affordable Monthly Mortgage…

A: 1. If we talk about allowable monthly housing expenditure then this value can be find out by…

Q: A) use the following data to substitute numerical values for A and B in the consumption and savings…

A: The consumption function is used to explain the relationship between consumption and disposable…

Q: Sound City also sells the ClearTone-400 satellite car radio. For this radio, historical sales…

A: A probability distribution is a statistical function that portrays every one of the potential…

Q: The most common use of the CPI is as an economic Indicator to forecast Inflation and evaluate the…

A: To get the value of CPI in January 2007, we have to put t=1, as t=1,2,3....77 not t=0,1,2...76. In…

Q: According to the textbook definition, a recession occurs if ___ GDP decreases for ____ Question…

A: If nominal GDP decreases for consecutive 2 quarters,then recession occurs.

Q: [31] Suppose we believe that increases in advertising increase a firm's profit, yet increases in…

A: Since you have posted multiple questions, we will provide the solution only to the first question as…

Q: 3. Consider the following model of car sales: In (qnc) = B, + ß, In(price)+ Bm. In (income)+u where…

A: The regression function shows the linear relationship between dependent and independent variables.…

Q: Consider the following regression: In (wage) = Bo + B₁ ln(age) + B₂ ln(education) + u, where wage is…

A: Regression model:It is a linear model that describes the relationship between two variables where…

Q: The base amount in gradient series stars at the beginning of the second period. Select one: True…

A: In gradient series there is a constant increase / decrease in the cash flow.

Q: [35] Suppose we believe that increases in advertising increase a firm's profit, yet increases in…

A: The regression we are given is: PROFIT=β0+β1ADV+β2RD Recall that if the coefficients β0,β1,β2 are…

Q: The economy is described by the following functions: C = 120 + 0.8YD Tr = 15 Tx = 5 I =…

A: GIVEN DATA The economy is described by the following functions: C = 120 + 0.8YD Tr = 15 Tx = 5 I =…

Q: Based on the information in the following table, use the Weighted moving average Approach to…

A: Given : Month weight demand Sep 1 161 Oct 2 122 Nov 3 106

Q: The following is the macro model of the economy for next year. (i) Find the parametric solutions for…

A: To find the parametric solutions for the predicted G.D.P (Y) and predicted net exports (X), we'll…

Q: From the press release of the statistics of Retail Sales for January 2021

A: ANSWER STEP-1 According to the given statement the satellite year was in middle February within the…

Q: i) What does the IS curve represents and why is negative slope? ii) Under which circumstances the IS…

A: The IS curve is the representation of different levels of combinations of interest rates and output…

Q: Can the IS curve shift in (Y,i) coordinates? What coordinates is it drawn in?

A: The IS curve represents the goods market equilibrium. At all points on this curve, desired…

Q: Calculate the value of MPC. The value of MPS is given to be as 0.95

A: # Sum of MPC and MPS together taken gives 1 MPC+MPS = 1

Q: 7. We ran a Vector-autoregresive model with two variables: with dtrade (change in trade balance),…

A: Based on the provided output of the Vector Autoregressive (VAR) model with two variables (dtrade and…

Question

Suppose that the United States enters a recession, and income falls by 2%.
Use the regression in column (1) to predict the change in demand.
The expected percentage change in demand is %. (Round your response to two decimal places.)

Data table
Two Stage Least Squares Estimates
of the Demand for Cigarettes Using Panel Data for 48 U.S. States
Dependent variable: In
Regressor
cigarettes
i, 1995
In
(pi $)-In
pcigarettes
i, 1995
In (Inci, 1995) - In (Inci, 1985)
Intercept
cigarettes
Instrumental variable(s)
First-stage F-statistic
Overidentifying restrictions J-test
and p-value
- In
cigrattes
i, 1985
Q
(1)
-0.94**
(0.21)
0.53
(0.34)
-0.12
(0.07)
Sales tax
33.70
Print
(2)
-1.34**
(0.23)
0.43
(0.30)
-0.02
(0.07)
Cigarette-specific tax
107.20
(3)
- 1.20**
(0.20)
0.46
(0.31)
-0.05
(0.06)
Done
Both sales tax
cigarette-specif
These regressions were estimated using data for 48 U.S. states (48 observations on the 10-year differenc
data are described in Appendix 12.1. The J-test of overidentifying restrictions is described in Key Concept
p-value is given in parentheses), and the first-stage F-statistic is described in Key Concept 12.5. Individual
coefficients are statistically significant at the *5% level or **1% significance level.
88.60
4.93
(0.026)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 INTRODUCTION

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Suppose the relationship between the government's tax revenue (T) and national income (Y) is represented by the equation T = 30 +0.5Y. Plot this relationship on a scale diagram, with Y on the horizontal axis and T on the vertical axis. Interpret the equation. Use the line drawing tool to draw the equation. Make sure to plot the vertical axis as one endpoint of the line. Properly label this line. Carefully follow the instructions above, and only draw the required objects.
This case study focuses on the Australian economy in 2019, before the COVID-19 pandemic hit. On 4th September 2019, the Australian Bureau of Statistics (ABS) published Real GDP data for the quarter ending June 2019. (The reporting of GDP always lags by about 2 months as it takes time to collect and compile data). The data showed that the Australian economy recorded quarterly growth of 0.5%. However, there was a decrease in Real GDP per capita. Furthermore, Real GDP per capita in June 2019 was lower than it was a year before (June 2018). Overall, while Real GDP still increased, the growth was very weak; the weakest on record since March 2001. (Source: Australian Financial Review and The Guardian). Required: Question 1. Clearly explain what Real GDP per capita means.Clearly explain why Real GDP per capita decreased whereas there was still growth in Real GDP for the quarter ending June 2019. Question 2. Given the economic conditions described above, predict how the following key…
Give an economic relationships ( with one response and one explanatory variable) in which correlation is possible. Discuss why autocorrelation exist in the relationship.
Bill's Bookstore is tracking its monthly demand for textbooks and has seen the following demand pattern. MONTH FORECASTED DEMAND ACTUAL DEMAND April 150 165 May 220 210 June 215 200 July 245 250 August 205 225 Based on this data, what is September's forecast using a three-month simple moving average?
You are employed by the state bureau of economic development. There is a demand for a leading economic index to review past economic activity and to forecast future economic trends in the state. You decide that several key factors should be included in the index: number of new businesses started during the year, number of business failures, state income tax receipts, college enrollment, and the state sales tax receipts. Here are the data for 2000 and 2018. New businesses Business failures State income tax receipts ($ millions) College student enrollment State sales tax ($ millions) Click here for the Excel Data File Leading economic indicator 2000 1,088 Economic activity has 627 191.7 increased decreased 242,119 41.6 c. Interpret the indexes. (Round your answer to 2 decimal places.) 2018 1,162 The weights you assign are: new businesses 15%, business failures 10%, income tax 40%, enrollment 10% and sales tax 25%. b. Compute the leading economic indicator for 2018. (Round your answer to…
The number of pending corporate fraud cases in federal court stood at 545 at the beginning of 2008 (t = 0). The number of cases had grown to 726 at the beginning of 2012. Assume the growth has been approximately linear. Develop the equation of the line that describes this linear growth. Then use that linear equation to estimate the number of cases pending at the beginning of 2014, assuming that the linear growth continues at the same rate.
54.
You are employed by the state bureau of economic development. There is a demand for a leading economic index to review past economic activity and to forecast future economic trends in the state. You decide that several key factors should be included in the index: number of new businesses started during the year, number of business failures, state income tax receipts, college enrollment, and the state sales tax receipts. Here are the data for 2000 and 2018. New businesses Business failures State income tax receipts ($ millions) College student enrollment State sales tax ($ millions) Click here for the Excel Data File Leading economic indicator The weights you assign are: new businesses 17%, business failures 10%, income tax 34%, enrollment 14% and sales tax 25%. b. Compute the leading economic indicator for 2018. (Round your answer to 2 decimal places.) 2000 1,125 592 196.2 242,159 46.1 Economic activity has 2018 1,059 286 178.8 291,079 66.7 c. Interpret the indexes. (Round your answer…
Which of the following statements is false? a) Trend GDP shows what the path of potential GDP would be if it grew steadily. b) A trough occurs at the end of a period of contraction. c) Trend GDP may be below potential GDP in some quarters and above in others. d) Trend GDP may be below actual GDP in some quarters and above in others.
Consider the following numerical example of the IS-LM model: C = 207+0.45% /= 150+0.21Y-1,099/ G = 396 T= 317 /= 0.06 Derive the IS relation. (Hint: You want an equation with Y on the left side of the equation and everything else on the right.) Y=- (Round your calculations of the intercept and slope terms to two decimal places.)
A zero slope shows: positive relationship between two variables no relationship between two variables does not show anything negative relationship between two variables
Calculate MPC when MPS is given to be as 0.9