Question

You try to explain the number of IBM shares traded in the stock market per day in 2005. As an independent variable you choose the closing price of the share. This is an example of A. invalid inference due to a small sample size. B. sample selection bias since you should analyze more than one stock. C. simultaneous causality.

Answer 1

This is an example of

C. simultaneous causality.

Explanation:

Simultaneous causality eliminates the conclusion that is often taken for granted to the effect that one variable is a response variable while the other is an explanatory variable because the two variables, the price and the number of shares, influence each other at the same time. When more shares are traded than demanded in the stock market in any day, the price tends to go down, and vice versa.