Final answer:
A strong positive correlation exists between a person's annual income and outstanding debt. Higher income often leads to larger borrowing opportunities, resulting in higher levels of debt. However, correlation does not imply causation.
Step-by-step explanation:
The strong positive correlation between a person's annual income and outstanding debt suggests that as a person's income increases, their debt also tends to increase. This can be explained by the fact that higher incomes often lead to access to more credit and borrowing opportunities.
For example, if someone earns a higher income, they may qualify for larger loans or credit limits, which can lead to higher levels of debt. On the other hand, people with lower incomes may have limited access to credit and borrowing options, resulting in lower levels of debt.
It is important to note that correlation does not necessarily imply causation. While there is a strong association between income and debt, it does not mean that higher income directly causes higher debt or vice versa. Other factors such as individual spending habits, financial education, and economic circumstances can also influence an individual's debt level.