An Illusory Correlation Is

question 52

Multiple Choice

An illusory correlation is

• A) a correlation that is positive at some times and negative at other times.
• B) an imagined or greatly exaggerated correlation.
• C) a correlation that has been increasing in strength over time.
• D) a correlation between a psychological variable and a physical variable.

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Definitions:

Nominal Rate

The advertised or stated rate of interest, not including the effects of inflation or compounding.

RRSP

Registered Retirement Savings Plan, a savings and investment vehicle for Canadians to save for retirement in a tax-efficient way.

Compounded Rate

The rate at which interest is calculated on the initial principal and the accumulated interest of previous periods.

Compounded Monthly

The calculation of interest on both the initial principal and the accumulated interest from previous months.