Consumption(individual) Income(individual) 3081.5 4620.3 3240.6 4803.7 3407.6 5140.1 3566.5 5323.5 3708.7 5487.7 3822.3 5649.5 3972.7 5865.2
a) Which economic theory explain the relationship between the two variables above? [3marks]
b) Construct a mathematical and econometric model based on your economictheory.[2 marks]
c) Estimate model with intercept and one without intercept based on your economic theory abovein part a). [15 marks]