Question

An economic development researcher wants to understand the relationship between the average monthly expenditure on utilities for households in a particular middle-class neighborhood and each of the following household variables: family size, approximate location of the household within the neighborhood, and indication of whether those surveyed owned or rented their home, gross annual income of the first household wage earner, gross annual income of the second household wage earner (if applicable), size of the monthly home mortgage or rent payment, and the total indebtedness (excluding the value of a home mortgage) of the household The correlation for each pairing of variables are shown in the table below: Table of correlations Family Size 1.000 OD10 0025 0D63 0058 0076 0.256 0.294 ation wnership First hcome me Monthly Pame tilities Family Size Location Ownership First hcome Second hcome Monthly Pa yment Ublities Debt 1.000 -0386 0537 0508 0511 0346 0461 1000 0445 0424 0552 0935 0.744 1 D00 0 884 0514 0 388 0 560 0.478 0.366 1.000 0.489 1.000 1.000 How would you interpret the relationship between Debt and Utilities? a. There is a strong positive linear relationship between debt and utility payments D. High utility payments lead to higher debt. C. Debt and utility payments are negatively correlated There is no relationship between these two variables

Answer 1

The Correlation coefficient between Debt and utilities is r = 0.778

There is a strong positive linear relationship between debt and utility payments.

Answer: Option a)