The Pearson correlation coefficient of household income (X) and expenditure (Y) of a particular city is calculated to be 0.90. What does the value indicate?

Answer 1

The Pearson correlation coefficient measures the strength and direction of the linear relationship between two variables. In this case, a value of 0.90 indicates a strong positive linear relationship between household income (X) and expenditure (Y) in the particular city. This means that as the household income increases, the expenditure also increases, and vice versa.