Does correlation always imply causation? Why or why not? Explain with the help of real-life examples
What will be an ideal response?
No, correlation does not always imply causation. Both causation and correlation study the relationship between two or more variables and are therefore often mistaken for each other. Correlation means that there is a mutual relationship between two variables; as one variable changes the other changes as well. Correlation between two variables does not necessarily imply that one causes the other. Correlation just enquires into the strength of association between two variables, whereas causation occurs when one variable directly affects the other variable through a causal relationship. For example, if a bakery starts using some new packaging material, and it improves the shelf life of bread, it represents a causal relationship. On the other hand, if someone claims watching violent movies increases crime rates in a country, it is not necessarily a causal relationship. However, some degree of correlation may exist between both.
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Unilateral transfers between countries are
A) long-term loans. B) only international gifts, never payments that do not correspond to the purchase of any good, service, or asset. C) part of the current account but not a part of national income. D) known for reducing the income of capital owners. E) the difference between Y and GNP if the identity Y = C + I + G + CA holds exactly.
What is the real (adjusted for inflation) present value of $104.25 that you could receive one year from now, given that the rate of interest is 4.25 percent and the anticipated rate of inflation is 1 percent?
A) $99.05 B) $100.97 C) $107.64 D) $100.00
U.S. government bonds held by commercial banks are: a. government assets and commercial bank assets
b. government assets and commercial bank liabilities. c. government liabilities and commercial bank assets. d. government liabilities and commercial bank liabilities.
The way in which an oligopolist acts in response to a price change by a competitor is known as a
A) zero-sum game. B) positive-sum game. C) reaction function. D) cooperative game.