A Complete Lack of Correlation Between Two Variables Is Expressed

question 68

Multiple Choice

A complete lack of correlation between two variables is expressed by a correlation coefficient of ________.

• A) 50
• B) 1.00
• C) -1.00
• D) zero

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Definitions:

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, used as an indicator of inflation.

Fisher Effect

A theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and nominal interest rates.

Nominal Interest Rate

The interest rate as stated without adjustment for inflation, representing the face value of financial transactions.

Real Interest Rate

This rate adjusts the nominal interest rate to remove the effects of inflation, providing a more accurate measure of the true cost of borrowing or the true return on investment.