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Suppose the structural equations in a simultaneous equation model are as follows: Ct = β1 + β2Yt+ ut and Yt = Ct+It, where Ct = consumption expenditure at time t, Yt = income at time t, and It = exogenous investment at time t. Which of the following can be identified as one of the reduced form equations for this model?

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MCQs on Econometrics, which is the use of statistical methods to develop theories or test existing hypotheses in economics or finance. 
 


Suppose the structural equations in a simultaneous equation model are as follows: <br/>C<sub>t</sub> = β<sub>1</sub> + β<sub>2</sub>Y<sub>t</sub>+ u<sub>t</sub> and Y<sub>t</sub> = C<sub>t</sub>+I<sub>t</sub>, where C<sub>t</sub> = consumption expenditure at time t, Y<sub>t</sub> = income at time t, and I<sub>t</sub> = exogenous investment at time t. Which of the following can be identified as one of the reduced form equations for this model?





 
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