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Class 11 - Economics
Correlation Test 01

Question No. 1 to 5 are based on the given text. Read the text carefully and answer the questions:

In statistics, Correlation studies and measures the direction and extent of relationship among variables, so the correlation
measures co-variation, not causation. Therefore, we should never interpret correlation as implying cause and effect
relation. For example, there exists a correlation between two variables X and Y, which means the value of one variable is
found to change in one direction, the value of the other variable is found to change either in the same direction or in the
opposite direction . Furthermore, if the correlation exists, it is linear, i.e. we can represent the relative movement of the
two variables by drawing a straight line on graph paper. The correlation coefficient, r, is a summary measure that
describes the extent of the statistical relationship between two interval or ratio level variables. The correlation coefficient
is scaled so that it is always between -1 and +1. When r is close to 0 this means that there is little relationship between
the variables and the farther away from 0 r is, in either the positive or negative direction, the greater the relationship
between the two variables.

1. ​When two variables change in the same direction, then such a correlation is called
a. ​Positive
b. ​No correlation
c. None of these
d. ​Negative
2. When the relation between three or more variables is studied simultaneously, it is called
a. ​None of these
b. Simple correlation
c. ​Partial correlation
d. ​Multiple correlation
3. Relation between price and demand is
a. No relation
b. one to one
c. Negative
d. ​Positive
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4. The correlation between shoe size and intelligence is
a. ​Zero
b. Positive
c. ​Negative
d. ​None of these
5. ​Coefficient of correlation always lies between ________ and ________.
6. The coefficient of correlation
a. Cannot be positive
b. Always positive
c. Can either be positive or negative
d. Cannot be negative
7. The lowest strength of association is reflected by which of the following correlation coefficients?

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a. 0.95
b. 0.29
c. 0.35
d. -0.60
8. Degree of Correlation Between + 0.25 and + 0.75 is
a. Moderate
b. High
c. Low
d. Perfect
9. Rank correlation coefficient r = 0.8., ∑ D = 33 ; Find ‘ n’.
2

a. 11
b. 12
c. 13
d. 10
10. Which of the following indicates the strongest relationship?
a. r = - .6
b. r2 = .2
c. r = .5
d. r = .08
11. Assertion (A): Scatter Diagram method is a graphic expression of the degree and direction or absence of correlation.
Reason (R): Scatter Diagram method falls to produce definite trend.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are true but R is not the correct explanation of A.
c. A is true but R is false.
d. A is false but R is true.
12. Fill in the blanks:
a. Only ________ method shows linear relation between two variables.
b. Data points scattered all over the diagram indicate no association between the two variables and hence there is
________.
13. In case of repetition of ranks, what is added to Σ D2?
14. What is meaning by correlation?
15. What do you find in following cases correlation/causation?
(a) When investigating the cause of crime in New York City in the 80s, when they were trying to clean up the city, an
academic found a strong correlation between the amount of serious crime committed and the amount of ice cream sold
by street vendors!
(b) The size of your palm is negatively correlated with how long you will live (really!). In fact, women tend to have
smaller palms and live longer.
(c) I heard of a study a few years ago that found the amount of soda a person drinks is positively correlated to the
likelihood of obesity.
16. What are assumptions taken by Karl Pearson's while developing his coefficient of correlation?
17. Find out rank difference correlation of X and Y
X 80 78 75 58 67 60 59
Y 12 13 14 14 16 15 17
18. Following are the heights and weights of 10 students of class XI.
Height (in inches) Weight (in kgs)

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X Y
62 50
72 65

68 63
58 50
65 54

70 60
66 61
63 55

60 54
70 65
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Draw a scatter diagram and indicate whether the correlation is positive or negative.
19. Draw a scatter diagram for:
i. Perfect positive correlation
ii. Perfect negative correlation
iii. Zero correlation
iv. Low positive correlation
v. low negative correlation
vi. High positive correlation
20. Calculate coefficient of correlation between age group and rate of mortality from the following data:
Age Group 0 - 20 20 - 40 40 - 60 60 - 80 80 - 100

Mortality 350 280 540 760 900

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Class 11 - Economics
Correlation Test 01

Solution

1. (a) ​Positive
Explanation: ​Positive
2. (d) ​Multiple correlation
Explanation: ​Multiple correlation
3. (c) Negative
Explanation: Negative
4. (a) ​Zero
Explanation: ​Zero
5. -1, +1
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6. (c) Can either be positive or negative
Explanation: Because the two series can be related directly or Inversely.
7. (d) -0.60
Explanation: We know that correlation coefficient ranges between +1 and -1. The maximum is +1 and the minimum is
-1. Here the lowest strength of association will be -.60.
8. (a) Moderate
Explanation: If value of r is close to 0, correlation is said to be low, while the values of r close to ±1 represent high
correlation. Degree of correlation between +0.25 and +0.75 will therefore be moderate.
9. (d) 10
2
6∑D
Explanation: r = 1−
2
n(n −1)

6(33)
0.8 = 1 −
2
n(n −1)

198
0.8 = 1 −
2
n(n −1)

198
= 1 − 0.8
2
n(n −1)

198
= 0.2
2
n(n −1)

198 2
= n( n − 1)
0.2

990=n(n2-1)
10(99)=n(n2-1)
10(100-1)=n(n2-1)
10(102-1) = n(n2-1)
n = 10
10. (a) r = - .6
Explanation: The highest score shows high degree of correlation. It can be positive or negative.
11. (b) Both A and R are true but R is not the correct explanation of A.
Explanation: Both A and R are true but R is not the correct explanation of A.
12. Fill in the blanks:
a. Karl Pearson's

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b. no correlation
13. 1

12
(m
3
− m) is added to Σ D2 in case of repetition of ranks.
14. Correlation is a statistical measure that indicates the extent to which two or more variables fluctuate together. A
positive correlation indicates the extent to which those variables increase or decrease in parallel; a
negative correlation indicates the extent to which one variable increases as the other decreases.
15. Correlation and causation:
Correlation measures co-variation, not causation. It should never be interpreted as implying cause and effect relationship
between two variables. The presence of correlation between two variables X and Y simply means that when one variable
is found to change in one direction, the value of the other variable is found to change either in same direction or in the
opposite direction.
As (a) and (b) indicate correlation and if rightly said, is spurious correlation however (c) may be a causation.
16. Following assumptions are taken by Karl Pearson's while developing his coefficient of correlation
1. The correlation coefficient is symmetrical with respect to X and Y i.e. XY = YX γ γ

2. The correlation coefficient is independent of origin and unit of measurement i.e. XY= UV γ γ

3. The correlation coefficient lies between - 1 and 1. i.e. −1 ≤ γ ≤ +1

17. In the given sum Equal Ranks or Tie in Ranks are assigned. In such case the same ranks are assigned to two or more
entities, then the ranks are assigned on an average basis. Such as if two individuals are ranked equal at third position,
then the ranks shall be calculated as: (3+4)/2 = 3.5
The formula to calculate the rank correlation coefficient when there is a tie in the ranks is:
2 1 3 1 3
6[Σ D + ( m −m1 )+ ( m −m2 )]
1 2
12 12
rk = 1 −
3
n −n

Calculation of Rank Correlation

X R1 Y R2 D = R1 - R2 D2
80 1 12 8 -7 49
78 2 13 7 -5 25
75 3.5 14 5 -1.5 2.25
75 3.5 14 5 -1.5 2.25
58 8 14 5 3 9
67 5 16 2 3 9
60 6 15 3 3 9
59 7 17 1 6 36
Σ D2 = 141.50
Here, n = 8, Σ D2 = 141.50 and m1 = 2; m2 = 3
1 1
2 3 3
6[Σ D + ( m −m1 )+ ( m −m2 )]
1 2
12 12

rk = 1 −
3
n −n
1 3 1 3
6[141.50+ ( 2 −2)+ ( 3 −3)]
12 12

= 1−
3
8 −8
6 24
6[141.50+ + ]
12 12 6(141.50+0.50+2)
= 1− = 1−
512−8 504

= 1 - 1.714 = -0.714
6×144 864
= 1− = 1−
504 504

It indicates that there is moderate degree of negative correlation.

18. Scatter diagram is a graphic method of studying correlation.
To construct a scatter diagram, X variable is taken on X-axis and Y variable is taken on Y-axis. The cluster of points, so
plotted is referred to as a scatter diagram. In a scatter diagram, the degree of closeness of scatter points and their overall

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direction gives us an idea of the nature of the relationship.
It is stated in the points below:
i. If the dots move from left to right, in an upward direction then correlation is said to be positive whereas the
movement of dots from left to right downwards indicates negative correlation.
ii. Dots in a straight line indicate perfect correlation.
iii. Dots falling close to each other in a straight line indicate high degree of correlation.
The scatter diagram of the above data is shown below.

Since the points are dense i.e., close to each other, we may expect a high degree of correlation between the series of
heights and weights. Further, since the points reveal an upward trend starting from left bottom and going up towards the
right top, the correlation is positive. Hence, we may expect a fairly high degree of positive correlation between height
and weight of the students of class XI.
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19.

Age Mid dx(X - A), Rate of dy(Y - A), dx'dy'

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Group Value(X) A = 50 dx'( dx
) , dx'2 Mortality(Y) A = 540 dy'(
dy
) , dy'2
c1 c2

c1 = 20 c2 = 10
20.
0 - 20 10 -40 -2 4 350 -190 -19 361 38
20 - 40 30 -20 -1 1 280 -260 -26 676 26
40 - 60 50 0 0 0 540 0 0 0 0

60 - 80 70 20 1 1 760 220 +22 484 22

80 -
90 40 2 4 900 360 +36 1296 72
100

Σdx'2 dy'2 =
Σ Σ dx'dy'
Total Σ dx' = 0 Σ dy' = 13
= 10 2817 = 158

Here, n = 5, Σ dx' = 0,Σ dx'2 = 10, Σ dy' = 13, Σ dy'2 = 2817, Σ dx' dy ' = 158
′ ′
Σdx ×Σdy
′ ′
Σdx dy −

Now, r = n

′ 2 ′ 2
(Σdx ) (Σdy )
√ ′2 √ ′2
∑ dx − × Σdy −
n n

0×13
158−
5
=
2 2
(0) (13)
√10− ×√2817−
5 5

158
=
169
√10−0 ×√2817−
5

158
=
√10 ×√2817−33.8

= +0.95
158 158 158
= = =
√10 ×√2783.2 3.16×52.8 166.8

Therefore, Karl Pearson's coefficient of correlation between age group and rate of mortality is 0.95
Interpretation of r: There is high degree of positive correlation between age group and rate of mortality.

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