Find the marginal propensity to consume

Reference no: EM1376379

According to the United States informationfor 1965-IQ to 1983-IQ (n=76), James and Adibi obtained the folowwing regression to explain personal consumption expenditure in the United States

^
Y = -10.96 + .93X(sub 2t) - 2.09X(sub 3t)

t= (-3.33) (249.06) (-3.09) R^2 = 0.9996
F= 83,753.7
where
Y = the PCE($, in billions)
X(sub 2) = the disposable (i.e. after-tax) income in billions
X(sub 3) = the prime rate (%) charged by banks

a.What is the marginal propensity to consume(MPC)- the amount of additional consumption expenditure from an additional dollar's personal disposable income?

b. Is the MPC statistically different from 1? show the appropriate testing procedure.

c. What is the rationale for the inclusion of the prime rate variable in the model? A priori, would u expect a negative sign for this variable?

d. Is b(sub 3) significantly different from zero? Why?

e. Test the hypothesis that R^2 = 0. Show work.

f. Compute the standard error of each coefficient. Show work.

Reference no: EM1376379

Questions Cloud

Estimating the equilibrium price and equilibrium quantity : Assume that the market is explained through the following supply and demand equations, Determine the equilibrium price and the equilibrium quantity.

Swiss membership in the european union : The European Union is a supranational management that has been capable to overcome tremendous national diversity consider of how different Germany, UK, Italy, Spain etc...

Evaluating the results of regression : Gold Trackers watching the value of precious metals and has daily information on prices and sales of gold for the last many years.

Determine the expected signs of the various coefficients : Determine the expected signs of the various coefficients and explain your reasoning.

Find the marginal propensity to consume : According to the United States informationfor 1965-IQ to 1983-IQ (n=76), James and Adibi obtained the folowwing regression to explain personal consumption expenditure in the United States

Manke a graph to show the relationship in variables : Manke a graph showing the relationship between two variables, X and Y . Determine whether the relationship is negative or positive

Determining equilibrium price and quantity : Compared to last year, more television sets are being bought while the selling price has fallen. This could have caused by:

Regression for predicting a future value : We have three variables, Information is 2000-2005. I use OLS to Determine the model and get a standard result.

Relationship between price and quantity demanded : Discuss the relationship in the price and quantity demanded in question four on a graph. Is the relationship direct or inverse?

User Account

All Pages