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As the picture shown below: 2. (10 marks) Assume that the true regression model of consumption function is of the form Consum; = B1 +

As the picture shown below:

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2. (10 marks) Assume that the true regression model of consumption function is of the form Consum; = B1 + 32Incomei + 83Inflation; + ci If the regression you estimated in Stata is the following model Consum; = 0.015 + 0.85Incomei (0.005) (0.15) Would the estimated propensity to consume 32 be biased? Can you predict the direction of the bias

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