A Consultant Has Asked You to Distinguish Between Factor Analysis

question 11

Multiple Choice

A consultant has asked you to distinguish between factor analysis and principal component analysis. What is the latter most commonly used for?

• A) To summarize data whilst retaining maximum variance.
• B) To summarize data whilst retaining minimum variance.
• C) To derive as few factors as possible.
• D) To derive as many solutions as possible.

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Definitions:

Printing Money

The process by which the central bank increases the money supply by physically creating more currency.

Deflation

A decrease in the general price level of goods and services, often indicating a contraction in the supply of money and credit in the economy.

Natural Resources

Raw materials supplied by nature that are used to produce goods and services.

Multilateral Assistance

Financial aid provided by multiple countries or international organizations to support economic development or humanitarian efforts in a recipient country.