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C i = 1 + 2 Y i + 3 W i + U i (1) Population regression model C i = b 1 +

C_i = ₁ + ₂ Y_i + ₃ W_i + U_i (1) Population regression model

C_i= b₁ + b₂Y_i+ b₃ W_i+ e_i (2) sample regression model

Where. C = Consumption and Y = Income, and W = wealth

a) What additional independent variables can be included?

b) Express the sample model in a deviation form.

c) Using the OLS method, derive in detail b2 and b3 using the matrix method and Cramers Rule.

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