(Last Word) If Variables X and Y Are Positively Correlated

question 322

Multiple Choice

(Last Word) If variables X and Y are positively correlated, this means that

• A) X is the cause of Y.
• B) Y is the cause of X.
• C) causation necessarily exists, but we don't know whether X or Y is the cause.
• D) causation may or may not exist between X and Y.

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Definitions:

Positive

Affirmative, constructive, or based on factual data; often used in reference to positive statements in economics which describe the world as it is, rather than how it should be.

Good Y

A general term used to represent a specific product or commodity in economic models or discussions.

Demand Function

A mathematical representation that describes the relationship between the quantity of a good that consumers are willing and able to purchase at various prices, holding other factors constant.

Income Elasticity

A measure of how much the demand for a product changes in response to a change in consumers' income.