In basic macroeconomics courses, we learn the consumption function is postulated by C = Bo + B1Y where C is consumption,

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In Basic Macroeconomics Courses We Learn The Consumption Function Is Postulated By C Bo B1y Where C Is Consumption 1 (125.13 KiB) Viewed 20 times

In basic macroeconomics courses, we learn the consumption function is postulated by C = Bo + B1Y where C is consumption, Bo is autonomous consumption and 3₁ is the marginal propensity to consume (MPC). Keynes as Using data on families, this consumption function is estimated as 100, R² = Ĉ= -124.84 +0.853Y, n= (i) Interpret the intercept estimate and explain its magnitude and sign. (ii) Given a family income of Y = = 0.692 $30,000, what is the predicted consumption level? (iii) With Y on the horizontal axis, plot this estimated function as well as the MPC and APC Bo/Y+₁. Make sure to label the plot properly. =