The Statement That "Correlation Does Not Imply Causality" Indicates That

question 14

Multiple Choice

The statement that "correlation does not imply causality" indicates that:

• A) a strong correlation coefficient does not mean there is a cause-effect relationship between factors.
• B) a weak correlation coefficient means there is weak link between factors.
• C) there is an excuse to ignore the meaning of a correlation.
• D) None of the above.

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Definitions:

Sacrifice Ratio

An economic ratio that measures the effect of rising unemployment on the reduction of inflation within an economy.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, eroding purchasing power.

Annual Output

The total value of goods and services produced by an economy or a firm in one year.

Rational Expectations

The economic theory suggesting individuals make decisions based on their logical expectations for the future, effectively using all available information to predict future events accurately.