Exhibit 2-1 -Exhibit 2-1 Shows Movements of Two Variables,X and Y,from 1980

question 97

Multiple Choice

Exhibit 2-1
-Exhibit 2-1 shows movements of two variables,X and Y,from 1980 through 1991.From this diagram the most one can conclude is that

• A)X and Y are positively correlated with each other.
• B)X and Y are negatively correlated with each other.
• C)X and Y are positively correlated with each other and either X causes Y or Y causes X.
• D)we cannot say anything about how X and Y are related because we do not know the units of measurement for X and Y.
• E)X and Y are not correlated with each other.

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Definitions:

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Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price in a market.

Unregulated Market

A market where economic activities are freely carried out without governmental intervention in terms of prices, production, and distribution.

Shortage

A situation where the demand for a product or service exceeds the supply available at a specific price.