Consider the Following Equation for Household Consumption Expenditure: Consmptn=

question 3

Multiple Choice

Consider the following equation for household consumption expenditure: Consmptn= ₀+ ₁Inc + ₂Consmptn_-1+ u
Where 'Consmptn' measures the monthly consumption expenditure of a household, 'Inc' measures household income and 'Consmptn_-1' is the consumption expenditure in the previous month. Consmptn_-1 is a _____ variable.

• A)exogenous
• B)binary variable
• C) lagged dependent
• D) proxy variable

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