Assume That You Had Data for a Cross-Section of 100

question 61

Essay

Assume that you had data for a cross-section of 100 households with data on consumption and personal disposable income. If you fit a linear regression function regressing consumption on disposable income, what prior expectations do you have about the slope and the intercept? The slope of this regression function is called the "marginal propensity to consume." If, instead, you fit a log-log model, then what is the interpretation of the slope? Do you have any prior expectation about its size?

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Definitions:

Nutritionists

Health professionals who specialize in advising on diet, nutrition, and the impact of food on health and wellbeing.

Diseases

Medical conditions characterized by an abnormal state affecting the body or mind, often associated with specific symptoms and signs.

Consequences

The results or effects that naturally follow from a specific action or set of conditions.

Brutality

Savage physical violence; excessive or cruel force.