Question: An economics student is studying the American economy and finds
An economics student is studying the American economy and finds that the correlation between the inflation-adjusted Dow Jones Industrial Average and the Gross Domestic Product (GDP) (also inflation adjusted) is 0.81 for the years 1946 to 2011. (www.measuringworth.com). From that he concludes that there is a strong linear relationship between the two series and predicts that a drop in the GDP will make the stock market go down. Here is a scatterplot of the adjusted DJIA against the GDP (in the years 1946 to 2011). Describe the relationship and comment on the student’s conclusions.
Answer to relevant QuestionsIs economic growth in the developing world related to growth in the industrialized countries? Here’s a scatterplot of the growth (in % of Gross Domestic Product) of 180 developing countries vs. the growth of 33 developed ...If we assume that the conditions for correlation are met, which of the following are true? If false, explain briefly. a) A correlation of —0.98 indicates a strong, negative association. b) Multiplying every value of x by ...An actuary at a mid-sized insurance company is examining the sales performance of the company’s sales force. She has data on the average size of the policy ($) written in two consecutive years by 200 salespeople. She fits ...A business student needs cash, so he decides to sell his car. The car is a valuable BMW 850CSi that was only made over the course of a few years in the 1990s. He would like to sell it on his own, rather than through a dealer ...Philanthropic organizations often rely on contributions from individuals to finance the work that they do, and a national veterans’ organization is no exception. The Paralyzed Veterans of America (PVA) was founded as a ...
Post your question