What Value of the Correlation Coefficient Implies That There Is

question 13

Multiple Choice

What value of the correlation coefficient implies that there is a perfect positive linear relationship between the two variables of a linear regression model?

• A)  1
• B) 0
• C) 0.5
• D) 1
• E) 

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Definitions:

Inventories

The goods and materials that a business holds with the purpose of resale or production in the future.

Wealth Effect

A behavioral economic theory suggesting that consumers spend more as the value of their assets rises, particularly visible in the increase in spending following a rise in home values or stock market portfolios.

Interest-Rate Effect

A theory suggesting that a change in interest rates will affect the level of spending on consumer goods and services due to the changes in borrowing costs.

Aggregate-Demand Curve

A curve that shows the total quantity of goods and services that all households, companies, government, and foreign buyers will purchase at each price level.