If Two Variables, X and Y, Have a Strong Linear

question 1

Multiple Choice

If two variables, x and y, have a strong linear relationship, then

• A) there may or may not be any causal relationship between x and y.
• B) x causes y to happen.
• C) y causes x to happen.
• D) the F test is used to conclude there is a causal relationship between x and y.

---

Definitions:

Reputation

A long-term standing in the public regard that serves to reassure others that private information is not being concealed; a valuable asset in the face of adverse selection.

Diversification

The strategy of allocating investments or resources among various financial instruments, industries, or other categories to reduce risk.

Economic Losses

Financial shortfalls that occur when a firm's total costs surpass its total revenues, leading to a negative profit margin.

Positively Correlated

Describes a relationship between events such that each event is more likely to occur if the other event also occurs.