Describe how the concept of correlation relationships may be abused or misinterpreted. Can you
think of examples of how correlations have been/could be wrongly used in the media or in your
field?
Solution
correlation coefficient is highly ineffective as a stand-alone quantity without reference to the
number of observations, the pattern of the data and the slope of the regression line
Regression analysis is typically misused by regressing one measurement on the other and
declare them equivalent if and only if the confidence interval for the regression coefficient
includes 1. Some simple mathematics shows that if the measurements are comparable, the
population value of the regression coefficient will be equal to the correlation coefficient between
the two methods. The population correlation coefficient may be close to 1, but is never 1 in
practice. Thus, the only things that can be indicated by the presence of 1 in the confidence
interval for the regression coefficient is (1) that the measurements are comparable but there
weren\'t enough observations to distinguish between 1 and the population regression coefficient,
or (2) the population regression coefficient is 1 and therefore, the measurements aren\'t
comparable.
Describe how the Federal Reserve is organized.SolutionThe Fede.pdf
1. Describe how the Federal Reserve is organized.
Solution
The Federal Open Market Committee (FOMC) is the monetary policymaking body of the
Federal Reserve System. The FOMC comprises of 12 members--7 members of the Board of
Governors (BoG) and 5 of the 12 Reserve Bank presidents. The Chairman of the BoG acts as the
Chairman of the FOMC; the president of the Federal Reserve Bank of New York is a permanent
member of the Committee and acts as the Vice Chairman of the Committee. The remaining four
voting positions on the FOMC is fulfilled by presidents of the other Reserve Banks on a rotating
basis. The FOMC looks after the open market operations, which is the primary tool used by the
Federal Reserve to influence and control money market conditions and the growth of money and
credit. The FOMC also authorizes currency swaps and large-scale asset purchases
