Savings and income Your microeconomics professor gives you a dataset of 90 households that describes the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Savings and income Your microeconomics professor gives you a dataset of 90 households that describes the savings behavior and economic characteristics (income, famsize) of a sample of families in South Bend. The dataset also contains demographic information about the head of household (age, educ). She asks you to investigate the relationship between savings and family income (both measured in USD). You estimate the following population model for households h. Savings,= Bo + BincomeIncomer + Bogeagen + Bagezagen + Beseduch + Befamsizen + un The output from your investigation is below (some of the STATA output is omitted for the purposes of this question): Regression 2 reg savings income age age2 educ size Source | Model | 74947229.8 Residual I 870066450 Total 945013680 savings I income I SS df .0198167 age | -261.5792 age2 | 3.947223 educ | 240.4716 size 127.6799 cons 1 2111.449 Coef. Std. Err. 5 14989446 10357933.9 84 89 10618131.2 .080943 521.9599 6.601421 123.8293 MS 240.8095 10032.21 Number of obs F(X, X) Prob > F R-squared Adj R-squared Root MSE t p>It x XXX -0.50 0.618 0.60 0.551 X xxx 0.53 0.597 0.21 0.834 хххххххх -1299.554 -9.180426 хххххххх X [95% Conf. Interval] -351.1963 -17838.71 90 X 0.0793 0.0245 3218.4 776.3954 17.07487 606.5561 22061.61 a) [2 points] Interpret the coefficient on income in words. b) [5 points] Set up a test of the hypothesis that income has no impact on savings in this model. Outline all of your steps. If you have enough information to complete this test, do so. If not, explain what additional information you need to complete the test. Now, before you ran this regression, you ran a simpler regression of savings on income alone, and got an R2 of 0.0331. c) [5 points] Set up a test of the hypothesis that foge Pope Bed and Blue are jointly zero. Outline all of your steps. If you have enough information to complete this test, do so. If not, explain what additional Information you need to complete the test. Savings and income Your microeconomics professor gives you a dataset of 90 households that describes the savings behavior and economic characteristics (income, famsize) of a sample of families in South Bend. The dataset also contains demographic information about the head of household (age, educ). She asks you to investigate the relationship between savings and family income (both measured in USD). You estimate the following population model for households h. Savings,= Bo + BincomeIncomer + Bogeagen + Bagezagen + Beseduch + Befamsizen + un The output from your investigation is below (some of the STATA output is omitted for the purposes of this question): Regression 2 reg savings income age age2 educ size Source | Model | 74947229.8 Residual I 870066450 Total 945013680 savings I income I SS df .0198167 age | -261.5792 age2 | 3.947223 educ | 240.4716 size 127.6799 cons 1 2111.449 Coef. Std. Err. 5 14989446 10357933.9 84 89 10618131.2 .080943 521.9599 6.601421 123.8293 MS 240.8095 10032.21 Number of obs F(X, X) Prob > F R-squared Adj R-squared Root MSE t p>It x XXX -0.50 0.618 0.60 0.551 X xxx 0.53 0.597 0.21 0.834 хххххххх -1299.554 -9.180426 хххххххх X [95% Conf. Interval] -351.1963 -17838.71 90 X 0.0793 0.0245 3218.4 776.3954 17.07487 606.5561 22061.61 a) [2 points] Interpret the coefficient on income in words. b) [5 points] Set up a test of the hypothesis that income has no impact on savings in this model. Outline all of your steps. If you have enough information to complete this test, do so. If not, explain what additional information you need to complete the test. Now, before you ran this regression, you ran a simpler regression of savings on income alone, and got an R2 of 0.0331. c) [5 points] Set up a test of the hypothesis that foge Pope Bed and Blue are jointly zero. Outline all of your steps. If you have enough information to complete this test, do so. If not, explain what additional Information you need to complete the test.
Expert Answer:
Answer rating: 100% (QA)
a The coefficient on income in the model is 00198167 which suggests that for every additional dollar ... View the full answer
Related Book For
Macroeconomics Principles Applications And Tools
ISBN: 9780134089034
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
Posted Date:
Students also viewed these accounting questions
-
Matrices as Linear Maps: A shear transformation is a linear map that displaces each point in a fixed direction (the s shear axis) by an amount proportional to the distance between the point and the...
-
You have recently completed a Bachelor of Business degree through the College of Business, Law and Governance at James Cook University (JCU) and have been appointed as a junior member in an asset...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
What are the four key building blocks of financial statement analysis? a. Liquidity and efficiency, solvency, profitability, and market b. Liquidity and efficiency, solvency, profitability, and...
-
When uranium 235 92 U decays, it emits (among other things) a g ray that has a wavelength of 1.14 10 11 m. Determine the energy (in MeV) of this ray.
-
A box contains 24 integrated circuits, 4 of which are defective. If 4 are sold at random, find the following probabilities. a. Exactly 2 are defective. c. All are defective. b. None is defective. d....
-
Negative Net International Investment Position. What does a countrys consistent negative net international investment position indicate?
-
Assume that during the month of April the production report of Austin Adhesives, Inc., in E8-10 revealed the following information: Units produced during the month . . . . . . . . . . . . . . . . . ....
-
Determine the surface area of the geometric figure: 3.2 ft/ 3.2 ft 3 ft 2.4ft 6 ft
-
What is the basic difference in orientation between financial and managerial accounting?
-
In an energy systems installation, following financial requirement was identified. Capital cost of equipment and installation - $ 150,000 Recurrent cost of maintenance Replacement of parts Life time...
-
In the course of auditing the financial statements of the Lowe Company for the year ended December 31, 19X2, you request that your client's attorney furnish a legal representation letter. The...
-
What is the difference between an RFP and an RFQ? Give an example of the appropriate use of each. How does procurement planning differ for government projects versus those in private industry?
-
What are the advantages of resource leveling?
-
In an audit of the Cotula Corporation as at December 31, 19X4, you have learned that the following situation exists. No entry in respect thereto has been made in the accounting records. What entry...
-
What is stakeholder engagement? What can project managers do to engage stakeholders? Can they use any techniques that your teachers have used to engage students in classes? Why or why not?
-
Karen wants potential clients interested in Assist You 2's numerous services to feel like they are getting a deal; she suggests using prices like $99.99 for two hours of office reorganization and...
-
3M Company reports the following financial statement amounts in its 10-K report: a. Compute the receivables, inventory, and PPE turnover ratios for both 2018 and 2017. (Receivables turnover and...
-
The lucky winner of a lottery was given an option. She could either receive $1 million a year for 20 years, for a total of $20 million, or simply receive $10 million today. Why would anyone take the...
-
When Professor Alan Blinder returned to teaching after serving as vice-chairman of the Federal Reserve from 1994 to 1996, he was convinced that committees were not effective for making decisions...
-
1. To compute the price elasticity of demand, we divide the percentage change in_______ by the percentage change in _______and then take the _______value of the ratio. 2. If a 10 percent increase in...
-
In 1969, William Kling, then age 26, was managing a radio station at St. John's Abbey and University in Minnesota. He hired a young man named Garrison Keillor to host a classical music program in the...
-
Founded in 1997 in Washington, DC, by social entrepreneurs Rajiv Vinnakota and Eric Adler, the SEED Foundation operates urban, college-preparatory, public boarding schools in Washington, DC,...
-
Go back and read the case of Aspire CoffeeWorks in Chapter
Study smarter with the SolutionInn App