ECON 300

February 3, 2025

Degrees of freedom = T minus 1

0.71

Research question: How do rising interest rates affect consumer demand for auto loans and new vehicle purchases?
Model: MC increases, MB decreases
- Marginal Benefit decreases because each additional unit consumed provides less value to the consumer.
  - As consumers consume more of a good, the additional satisfaction (benefit) from each extra unit decreases, following the law of diminishing marginal utility.
- Marginal Cost increases because each additional unit becomes more expensive to produce as resources get stretched.
  - As production or consumption increases, each additional unit costs more to produce due to factors like limited resources, inefficiencies, and higher input prices.
Dependent variables: Auto loan demand, new vehicle purchases
IV: Interest rates
- household income
- unemployment rate
- price of new cars
- terms of loan currently offered
- prices of gas
- Credit Score
X - Axis is quantity
y-axis is demand of auto loans

For presentation next class:
- Need to show dependent variable, explanatory variable, Control Variables
- Y = [Constant variable] + B₁X₁ + B₂X₂ + [Error variable]
- Main question for presentation: What is your unit of time/observation?
For Excel:
- Each row is an observation [Check Sachs(1) Excel Sheet in Data section on Canvas]
  - County level data: Each row is a county
    - First color would be name for country
  - Time Series Data: Each row is a unit of time
    - Could be annually, daily for stock market, quarterly.