If You Have a Curvilinear Relationship and the Pearson Product

question 24

Multiple Choice

If you have a curvilinear relationship and the Pearson product moment correlation coefficient is close to zero, what can you conclude about the relationship between the variables?

• A) There is no relationship between the variables
• B) You cannot conclude anything about the relationship based on this information
• C) There is a strong relationship
• D) There is a weak relationship

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Definitions:

Interest-Rate Increase

A rise in the cost of borrowing money, reflected in a higher percentage charged on loans and credits.

Consumer Optimum

A state where a consumer has allocated their resources in such a way that maximizes their utility, given their budget constraint.

Income Effect

The change in consumption that results from changes in real income, affecting the purchasing power of consumers.

Substitution Effect

The economic understanding that as prices rise or income decreases, consumers replace more expensive items with less costly alternatives.