PRC-2 · Chapter 10 · Question 33 of 60
If the correlation coefficient (r) between two economic variables is exactly -0.80, what is the resulting coefficient of determination, and what does it signify?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 0.64; meaning 64% of the variation in the dependent variable is explained by the independent variable.
Explanation
The coefficient of determination is calculated by squaring r. (-0.80)^2 = 0.64. This metric indicates that 64% of the mathematical variance in variable Y can be reliably explained by the linear relationship with variable X.
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