so believe that personal consumption expenditures might atus (married-single). By setting appropriate dummy variables, construct a regr nsumption but also the marginal propensity to consume a atus. In your regression, you should have the assumption arital status) on autonomous consumption and marginal o categories of marital status (gender). Once you constru rsonal consumption expenditures of each group.

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
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Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 2AGP
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3. Suppose you want to analyse personal consumption expenditures by using income. However, you
also believe that personal consumption expenditures might vary by gender (female-male) and marital
status (married-single).
(a) By setting appropriate dummy variables, construct a regression where not only the autonomous
consumption but also the marginal propensity to consume are allowed to vary by gender and marital
status. In your regression, you should have the assumption that the 3 differential effect of gender
(marital status) on autonomous consumption and marginal propensity to consume is the same across
two categories of marital status (gender). Once you construct your regression, derive the expected
personal consumption expenditures of each group.
(b) Re-construct the regression in (a) by allowing the differential effect of gender (marital status) on
autonomous consumption and marginal propensity to consume to vary across two categories of
marital status (gender) and derive expected personal consumption expenditures of each group.
Transcribed Image Text:3. Suppose you want to analyse personal consumption expenditures by using income. However, you also believe that personal consumption expenditures might vary by gender (female-male) and marital status (married-single). (a) By setting appropriate dummy variables, construct a regression where not only the autonomous consumption but also the marginal propensity to consume are allowed to vary by gender and marital status. In your regression, you should have the assumption that the 3 differential effect of gender (marital status) on autonomous consumption and marginal propensity to consume is the same across two categories of marital status (gender). Once you construct your regression, derive the expected personal consumption expenditures of each group. (b) Re-construct the regression in (a) by allowing the differential effect of gender (marital status) on autonomous consumption and marginal propensity to consume to vary across two categories of marital status (gender) and derive expected personal consumption expenditures of each group.
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