- 4 Given The Following Estimated Results Of A Keynesian Consumption Function C 145 0 745y R 0 852 A With Respe 1 (76.55 KiB) Viewed 18 times
4. Given the following estimated results of a Keynesian consumption function: ^ C = 145+0.745Y; R² = 0.852 a) With respect to the absolute income hypothesis, provide an interpretation of the estimated constant and marginal propensity to consumption in this equation including their signs and magnitudes. b) Calculate the predicted consumption of a hypothetical household with an annual disposable income of N40,000. 1 c) With Ya on the x-axis, sketch a graph of the estimated marginal propensity to consumption and autonomous consumption. d) Derive a 95% confidence interval for each coefficient. e) Find and explain the multiplier from the consumption function.