Consider the data in the following table. $$\begin{array} { l c c }
\hline \text { Year } & \begin{array} { c }
\text { Growth Rate of } \
\text { Real Investment }
\end{array} & \begin{array} { c }
\text { Growth Rate } \
\text { of Real GDP }
\end{array} \
\hline 1 & - 3 \text { percent } & 2 \text { percent } \
2 & - 1 \text { percent } & - 1 \text { percent } \
3 & 1 \text { percent } & - 2 \text { percent } \
4 & 4 \text { percent } & - 2 \text { percent } \
5 & 0 \text { percent } & - 1 \text { percent } \
\hline
\end{array}$$ Do the data match the experience of a developed country like the United States?
A) Yes, because the two growth rates are positively correlated.
B) No, because the two growth rates should be positively correlated.
C) Yes, because the two growth rates are negatively correlated.
D) No, because the two growth rates should be negatively correlated.
E) Yes, because these two growth rates are unrelated.

Question

Consider the data in the following table. $$\begin{array} { l c c } 
\hline \text { Year } & \begin{array} { c } 
\text { Growth Rate of } \
\text { Real Investment }
\end{array} & \begin{array} { c } 
\text { Growth Rate } \
\text { of Real GDP }
\end{array} \
\hline 1 & - 3 \text { percent } & 2 \text { percent } \
2 & - 1 \text { percent } & - 1 \text { percent } \
3 & 1 \text { percent } & - 2 \text { percent } \
4 & 4 \text { percent } & - 2 \text { percent } \
5 & 0 \text { percent } & - 1 \text { percent } \
\hline
\end{array}$$ Do the data match the experience of a developed country like the United States?
A) Yes, because the two growth rates are positively correlated.
B) No, because the two growth rates should be positively correlated.
C) Yes, because the two growth rates are negatively correlated.
D) No, because the two growth rates should be negatively correlated.
E) Yes, because these two growth rates are unrelated.

Quizplus · Accepted Answer

In developed countries like the United States, real investment and real GDP growth rates are typically positively correlated, meaning that when investment grows, GDP tends to grow as well. The data provided shows no consistent positive correlation, which does not match the typical experience of a developed country.

Consider the Data in the Following Table Do the Data Match the Experience of a Developed Country