Dr Samways Is Interested in the Relationship Between Education Level

question 178

Multiple Choice

Dr. Samways is interested in the relationship between education level and annual income. He randomly selects 5000 Canadians and collects information about their highest completed education and last year's income. He then calculates a correlation coefficient, and finds that the correlation between education and income is +.78. On the basis of this correlation we can conclude that

• A) there is no relationship between education and income.
• B) as education increase income also increases AND higher education causes higher income.
• C) as education increases income decreases.
• D) as education increases income also increases.
• E) higher education causes higher income.

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Definitions:

Money Demanded

The total amount of money that households and firms want to hold at any given time, influenced by income levels, interest rates, and economic activity.

Market Interest Rate

The prevailing rate at which borrowers can obtain money from lenders, influenced by supply and demand in the money market.

Store of Value

An asset that can be saved, retrieved, and exchanged at a later time, and is predictably useful when retrieved.

Liquidated

The process of converting assets into cash or other forms of payment, often used in bankruptcy proceedings.