A bank collects data on the savings and incomes of families to predict an expected increase in certificate of deposit accounts due to a 10% increase in salaries of employees at a local company. Which variable, savings or income, would be the explanatory variable?
A) family savings
B) family income

Question

Quizplus · Accepted Answer

The explanatory variable is the variable that is believed to have an effect on the response variable (in this case, the expected increase in certificate of deposit accounts). In this scenario, the explanatory variable is the change in family income due to the 10% increase in salaries of employees at a local company. The bank believes that this increase in income will lead to an increase in savings and ultimately an increase in certificate of deposit accounts. Therefore, family income is the explanatory variable.

A Bank Collects Data on the Savings and Incomes of Families