The Consumption Function of the U

question 55

Short Answer

The consumption function of the U.S. economy from 1929 to 1941 is , where is the personal consumption expenditure and is the personal income, both measured in billions of dollars. Find the rate of change of consumption with respect to income, . This quantity is called the marginal propensity to consume.
Round the answer to three decimal places, if necessary. __________

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Definitions:

Demand Increases

A rise in the quantity of a product or service that consumers are willing and able to purchase at various prices, often leading to adjustments in production or pricing strategies.

Smoothing Constants

Parameters used in exponential smoothing methods for forecasting that determine the weight of historical data in making predictions.

Naive Forecast

A forecasting technique that assumes future values will be the same as past values, often used as a baseline for more complex models.

Time-series Data

Data points collected or recorded at successive points in time, often used to analyze trends, cycles, or patterns.