A Researcher Has Found a Strong Relationship Between Level of Education

question 37

Multiple Choice

A researcher has found a strong relationship between level of education and income and concludes that "higher levels of education cause higher income." What error has been made?

• A)None,the argument is sound.
• B)Income is only nominal in level of measurement and education is ordinal so they cannot be causally related.
• C)Since these variables are continuous and interval ratio,they cannot have a causal relationship.
• D)By itself,association does not prove causation.

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Definitions:

Commercial Substance

Commercial substance refers to a transaction that causes a significant change in the cash flows of a company or significantly alters the entity's operations.

Trade-in Allowance

The credit a buyer receives when they trade in an old asset (like a car) towards the purchase of a new asset, reducing the price of the new purchase.

Book Value

The net value of a company's assets as listed on the balance sheet, calculated by subtracting liabilities from total assets.

Commercial Substance

A concept indicating that a transaction significantly changes the economic position or cash flows of the parties involved, beyond mere contractual obligations.