Explain the difference between correlation and causation. Give an example of each.
What will be an ideal response?
Should show a thorough understanding of correlation and causation. Correlation is when two events occur together. However, this does not necessarily mean that one event caused the other. For example, a wolf could begin to howl just as a cloud covers the moon. The wolf howling did not cause the cloud to cover the moon. On the other hand, causation means one event brings about another event. These events may happen at the same time, but not necessarily. For example, there could be a fierce thunderstorm in the mountains. Ten hours after the storm, there is a landslide. The storm caused the landslide by loosening the soil. But the storm and the landslide did not happen at the same time.
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If uncertainty about banks' health causes depositors to begin to withdraw their funds from banks, the country experiences a(n)
A) banking crisis. B) financial recovery. C) reduction of the adverse selection and moral hazard problems. D) increase in information available to investors.
Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in
a. both Mexican GDP and U.S. GDP. b. Mexican GDP, but it is not included in U.S. GDP. c. U.S. GDP, but it is not included in Mexican GDP. d. neither Mexican GDP nor U.S. GDP.