Explain the difference between correlation and causation and give an example
Please provide the best answer for the statement.
Correlation refers to a systematic association between two sets of data (two outcomes). Causation implies that there is a cause-effect relationship between two events. Correlation does not imply causation. Just because two events are related in a predictable manner does not necessarily mean that one causes the other. More must be known about the cause-effect relationship before conclusions about causation can be drawn.
For example, one could discover a positive correlation between ice-cream sales and the number of drownings. However, this does not mean that eating ice cream causes drowning, nor does it mean that more drownings cause people to buy ice cream!
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A common measure of income distribution is the:
a. Bergson curve b. Kornai Curve c. Feldstein curve d. The Hayek Curve e. the Gini coefficient
Which of the following both make the interest rate on a bond higher than otherwise?
a. the interest it pays is taxed and it was issued by a financially strong corporation b. the interest it pays is taxed and it was issued by a financially weak corporation c. the interest it pays is tax exempt and it was issued by a financially strong corporation d. the interest it pays is tax exempt and it was issued by a financially weak corporation