Question

Erfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perfectly ________ correlated series move exactly in opposite directions and have a correlation coefficient of ________.

A. negatively; -1; positively; +1
B. negatively; +1; positively; -1
C. positively; -1; negatively; +1
D. positively; +1; negatively; -1

Answer 1

D. positively; +1; negatively; -1

Step-by-step explanation:

Correlation measures the relationship that exists between two variables.

A variable is perfectly correlated when there's a relationship between the variables; when they move in the same direction. An increase in one variable leads to a corresponding equal increase in the other variable.

A variable is perfectly negatively correlated if the relationship between the two variables is perfectly negative. An increase in one of the variables leads to a corresponding equal decrease in the other variable.

No correlation is when there's no relationship between variables.

We can say price is negatively correlated to quantity demanded but positively correlated to quantity supplied.

Correlations can be depicted in scatter diagrams