How does correlation differ from causation? Give an example of each to illustrate your answer
Correlation means that two (or more) variables change in a systematic fashion. Economic examples include large cash withdrawals from banks at the end of the month, which coincide with payday and the due dates of bills. (The end of the month does not cause withdrawals.) Causation means that two (or more) variables are related so that a change in one actually causes a change in the other. Economic examples include a change in price leading to a change in the amount of an object which people wish to buy. (Non-economic examples can be used as well.)
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There is a man yelling for help on a crowded subway platform. What are two reasons that the man may not get the help he needs?
What will be an ideal response?
Aggregate measures are
A) anything to do with economics. B) a total measure of a variable in the economy. C) used only by policymakers but not by firms. D) determined by the government.
In an inflationary expenditure gap, the equilibrium level of real GDP is:
A. Greater than planned investment B. Equal to full-employment GDP C. Greater than full-employment GDP D. Less than full-employment GDP
The Patient Protection and Affordable Care Act (PPACA) includes the establishment of "insurance exchanges" in each state, the purpose of which is to:
A. Create a monopoly or oligopoly of insurance companies in each state B. Fix insurance premiums, similar to public utilities C. Foster competition among insurance companies D. Nationalize the insurance industry in each state