t to analyse personal consumption expenditures by using income. However, you also believe that personal consumption expenditures might vary by gender (female-male) and marital status (married-single). By setting appropriate dummy variables, construct a regression where not only the autonomous consumption but also the marginal propensity to consume are allowed to vary by gender and marital status. In your regression, you should have the ass
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Suppose you want to analyse personal consumption expenditures by using income. However, you also believe that personal consumption expenditures might vary by gender (female-male) and marital status (married-single).
By setting appropriate dummy variables, construct a regression where not only the autonomous consumption but also the marginal propensity to consume are allowed to vary by gender and marital status. In your regression, you should have the assumption that the differential effect of gender (marital status) on autonomous consumption and marginal propensity to consume is the same across two categories of marital status (gender). Once you construct your regression, derive the expected personal consumption expenditures of each group.
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