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Baruch College, CUNY ECO -Term Project An exercise in macroeconomics: $8.49   Add to cart

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Baruch College, CUNY ECO -Term Project An exercise in macroeconomics:

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Term Project An exercise in macroeconomics: Recall that in ECO 1002 or any other intro macro, total consumption expenditure is a function of disposable income (or after-tax income). Specifically, we have: Consumption = a constant + (marginal propensity to consume) * (disposable income), and ‘...

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  • July 6, 2021
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Nereida Saka Barry Ma
Eco 4000

Term Project

An exercise in macroeconomics:
Recall that in ECO 1002 or any other intro macro, total consumption expenditure is a function of disposable income (or after-tax
income). Specifically, we have:
Consumption = a constant + (marginal propensity to consume) * (disposable income), and ‘marginal propensity to consume’ is a




a
fixed unknown number. The constant term in the above equation is often assumed to be zero but here, we take a more general




vi
assumption that the constant can be any number but the number is unknown to us. Note that the above equation as taught in econ
theory has no random term in it.




d
The following data (sample) is obtained from a government publication, Economic Report of the President:




e
Year Disposable Income Consumption




ar
sh
1970 751.6 672.1

1971 779.2 696.8




as
1972 810.3 737.1




w
1973 864.7 767.9




m e
1974 857.5 762.8

1975 874.9
co rc 779.4
o. ou
1976 906.8 823.1
er res

1977 942.9 864.3
eH y


1978 988.8 903.2
rs ud



1979 1015.7 927.6
t
ss




1
hi

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