Consider the data in the following table.
$$\begin{array} { l c c }
\hline \text { Year } & \begin{array} { c }
\text { Growth Rate of } \
\text { Real Investment }
\end{array} & \begin{array} { c }
\text { Growth Rate } \
\text { of Real GDP }
\end{array} \
\hline 1 & 0 \text { percent } & 2 \text { percent } \
2 & - 2 \text { percent } & - 3 \text { percent } \
3 & 3 \text { percent } & 5 \text { percent } \
4 & - 1 \text { percent } & 0 \text { percent } \
5 & 1 \text { percent } & 1 \text { percent } \
\hline
\end{array}$$

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. 
$$\begin{array} { l c c } 
\hline \text { Year } & \begin{array} { c } 
\text { Growth Rate of } \
\text { Real Investment }
\end{array} & \begin{array} { c } 
\text { Growth Rate } \
\text { of Real GDP }
\end{array} \
\hline 1 & 0 \text { percent } & 2 \text { percent } \
2 & - 2 \text { percent } & - 3 \text { percent } \
3 & 3 \text { percent } & 5 \text { percent } \
4 & - 1 \text { percent } & 0 \text { percent } \
5 & 1 \text { percent } & 1 \text { percent } \
\hline
\end{array}$$

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

The data show that when the growth rate of real investment increases, the growth rate of real GDP also tends to increase, and vice versa, indicating a positive correlation between the two. This matches the experience of developed countries like the United States, where investment growth is typically associated with GDP growth.

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