Correlation Is a Statistical Measure of the Relationship Between a Series

question 13

Multiple Choice

Correlation is a statistical measure of the relationship between a series of numbers representing data. Which of the following statements about correlation is/are correct?
I. Perfectly negatively correlated describes two negatively correlated stocks that have a correlation coefficient of -1.
II. Perfectly positively correlated describes two positively correlated stocks that have a correlation coefficient of 0.

• A) I only
• B) II only
• C) Both I and II
• D) Neither I nor II

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Definitions:

Autonomous Consumption

Consumption spending that occurs even when income is zero, representing the basic level of consumption necessary for survival.

Disposable Income

The monetary provision for households post the calculation of income taxes dedicated to saving and spending.

Consumption

The use of goods and services by households, which is a primary component of the economy and influences economic growth.

Induced Consumption

Refers to the portion of consumer spending that increases or decreases with disposable income.