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:

Price Floor

A government or regulatory-imposed minimum price for a good or service, intended to prevent prices from falling below a certain level.

Shortage

An instance where the need for a good or service surpasses its availability in the marketplace.

Subsidy

Financial assistance provided by government to support businesses, organizations, or individuals, often aimed at encouraging certain economic activities or reducing burdens.

Selling Price

The amount of money that a seller charges for a product or service.