Suppose You Wish to Estimate the Marginal Effect That Income

question 32

Multiple Choice

Suppose you wish to estimate the marginal effect that income has on consumption for in a time-series for a given country.The static time-series model would be specified as

• A) \(\text { Consumption } _ { i } = \beta _ { 0 } + \beta _ { 1 } \text { Income } _ { i } + \beta _ { 2 } \text { Income } _ { i - 1 } + \varepsilon _ { t } \text {. }\)
• B) \(\text { Consumption } _ { t } = \beta _ { 0 } + \beta _ { 1 } \text { Income } _ { t } + \varepsilon _ { t } \text {. }\)
• C) \(\text { Consumption } _ { i } = \beta _ { 0 } + \beta _ { 1 } \text { Income } _ { i } + \varepsilon _ { i } \text {. }\)
• D) \(\text { Consumption } _ { t } = \beta _ { 0 } + \beta _ { 1 } \text { Income } _ { t } + \beta _ { 2 } \text { Income } _ { t - 1 } + \varepsilon _ { t } \text {. }\)

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Definitions:

Long Run

Long run refers to a time period in economics where all inputs or factors of production can be adjusted, allowing an analysis of long-term planning or investment outcomes.

Monopolistic Competitor

A monopolistic competitor is a firm that has many competitors in a market but differentiates its product or service enough to have some control over its price.

Tex-Mex Restaurant

A type of dining establishment that serves a fusion cuisine of Texan and Mexican origins, characterized by its hearty, flavorful dishes.

Local Phone Company

A telecommunications provider that offers services within a specific geographic area, typically handling local calls and access.