In Words,how Would You Find the Standard Deviation of the Difference

question 6

Multiple Choice

In words,how would you find the standard deviation of the difference between two independent random variables?

• A)It is the difference between the two standard deviations.
• B)It is the square root of the difference between the two variances.
• C)It is the sum of the two standard deviations.
• D)It is the square root of the sum of the variances.
• E)It is the square root of the sum of the standard deviations.

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Definitions:

Paasche Index

Amount of money at current-year prices that an individual requires to purchase a current bundle of goods and services divided by the cost of purchasing the same bundle in a base year.

Nominal Income

The amount of money received in a specified period before adjusting for inflation.

Revealed Preference

An economic concept suggesting that the preferences of consumers can be observed by their purchasing habits and choices.

Inflation Level

Inflation level measures the rate at which the general level of prices for goods and services is rising, eroding purchasing power.