What Does Simpson's Paradox Teach Us

question 13

Multiple Choice

What does Simpson's Paradox teach us?

• A)The nature of an association can reverse direction when data from several groups are combined to form a single group.
• B)Omitting a third variable can mask the true relationship between two categorical variables.
• C)It is dangerous to summarize information over groups, especially if the individuals were not randomly assigned to those groups.
• D)All of the above.

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Definitions:

Net Capital Outflow

The difference between the domestic country's purchase of foreign assets and foreign purchases of the domestic country's assets over a certain period.

Net Exports

The value of a country's total exports minus its total imports, representing the trade balance within a specific period.

Tariffs

Taxes or duties imposed on imported goods to make them more expensive compared to domestic goods, often used to protect local industries.

Trade Balance

The difference in value between a country's imports and its exports; a surplus indicates more exports than imports, and a deficit the opposite.