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adaptive expectations algebra of expectations associated assumed assumption autocorrelation autos average behavior Business capital coefficient computed constant consumption function consumption spending core inflation covariance data bank deflator demand function dependent derived discussed Dollars dummy variable econometric software econometrician economic economists empirical employment equal Equation equilibrium evaluate example expected value Figure Gross National Product growth rate heteroscedasticity hypothesis increase independent variable index of summation indicate interest rate investment spending issues labor lag parameters lag structure Lesson Note linear logarithms logistic function long-run mean and variance measure money supply observed ordinary least-squares estimators ordinary least-squares slope output percent period personal income Phillips curve polynomial price index problem production function purchasing power parity random error term random variables rational expectations regression model relationship residuals sample short-run shown shows sigma sigma notation simple consumption function specification statistical student theory tion var(X