Do We Get a Useful and Meaningful Statistic by Dividing

question 88

Multiple Choice

Do we get a useful and meaningful statistic by dividing the national debt by the GDP?

• A)No - we are essentially "dividing apples by oranges," which is unhelpful.
• B)No - the GDP is not a meaningful measure of the well-being of the economy.
• C)Yes - we can then see how much of the national debt is owed by each individual citizen.
• D)Yes - we can see the burden of the debt in relation to the size of the economy.
• E)No - dividing a stock by a flow can never be sensible.

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Definitions:

Distribution System

A distribution system is the network through which a company delivers its products or services to the end consumers.

Law of Small Numbers

A cognitive bias that leads individuals to draw broad conclusions from small data sets or a limited number of observations.

Representativeness Heuristic

A cognitive shortcut that involves judging the likelihood of an event by comparing it to an existing prototype that comes to mind, often leading to errors in decision making.

Availability Bias

A cognitive bias where individuals overestimate the importance of information readily available to them.