Two Variables That Are Actually Not Related to Each Other

question 579

Multiple Choice

Two variables that are actually not related to each other may nonetheless have a very high
Correlation because they both result from some other, possibly hidden, factor. This is an example of

• A) a lurking variable.
• B) an outlier.
• C) leverage.
• D) extrapolation.
• E) regression.

---

Definitions:

Money Supply

The entire volume of money assets within an economy at a particular time.

Fed Increases

Refers to the Federal Reserve raising interest rates or tightening monetary policy, typically to combat inflation or overheating in the economy.

Adverse Supply Shock

A situation where the supply of goods decreases suddenly, leading to higher prices and lower quantities available.

Short-Run Aggregate-Supply Curve

Depicts the relationship between the price level and the quantity of goods and services that firms are willing to produce, taking some inputs as fixed.