Question 1.

d:

Statistical data for the exchange rate and export quantities over a 58-year period yield results
that favor the idea of a positive correlation between the two quantities. First and foremost, the
correlation coefficient was calculated from [1961 – 2019] to be:

ρ = 0.3772  This is the key indicator that tells us that: as exchange rate rises, the export quantities are
expected to rise.

Note that a correlation coefficient of 1 implies an extremely strong positive relationship

between two variables, and -1 is the exact opposite implication. Our calculated value of ρ, albeit
positive, proves only that there is a moderate positive relationship between the two variables because
the value is closer to 0 than it is to 1. This is visible in the graphical representation of the data set. There
are several clear periods where the graphs are rising and falling during the same time.

For example during 2010 – 2019 period, (see Fig.1.1), when exchange rate recovers from 1% up
to 1.3% there is a steady increase in the export quantities.

Fig.1: Edited time series plot, area of visible positive correlation (blue)

General increase in Exchange Rate

Fig.1.1

General increase in Export Quantity

Upon inspection of Fig.1, it is visible that from 2008 Q3 – 2009 Q2, there is a clear contradiction
between the calculated correlation coefficient, and the pattern seen in this period. This same
contradiction is visible, albeit to a much lesser extent, in the period 1974 Q3 – 1975 Q1. The
contradiction being, that the variables are supposed to be positively related, yet during these periods
they are behaving as though they are negatively related. The period from 2008 – 2009 is easily
explained by the recession that took place. The recession most likely negatively impacted the value of
the American Dollar which resulted in the exchange rate being driven up. Normally, it is expected that
an increase in exports would occur, however the opposite happens. The most likely reason for this is
that the American economy was set too far back to focus on additional expenditures on imports
(Canadian exports). Hence, for this period, an increase in exchange rate did not yield increased exports.
A similar event is the most probable explanation for the period of 1974 Q3 – 1975 Q1.

The standard deviations and coefficients are generally increasing as we progress in time. The
simple explanation for this is that the number of exports is increasing with time. This is because the
economies are becoming larger and must sustain larger populations and production requirements. As a
result of the growing requirements and population, an increase in exports must occur. Upon inspection,
it is easily seen that the mean value of exports are increasing and hence, the number of exports are as
well. The reason an increase in exports yields higher standard deviation and variance coefficients is
because in general we are dealing with larger numbers. A small percentage change in a small value, is a
small change. This is seen clearly in the exchange rate standard deviations and coefficients of variance.
Similarly, a small percentage change in a big value, is a big change. Hence, the standard deviations are
much larger in the exports than in the exchange rates and the gradual increase in both exchange rates
and export quantities causes an increase in their respective standard deviations and variance
coefficients.

The second graph slightly indicates that there is a positive relation between the exchange rate
and exports (see Fig.2.1). This is most likely because export quantities are not solely dependent on
changes in the exchange rate. Exports increase as the size of the economy and its trading partners’
increases. This is why there are many coordinates sitting at the top of the graph, even though the
exchange rate is not much greater than 1 (see Fig.2.2).

Fig.2: Edited Exports vs Exchange Rates, areas of correlation (blue) and non-correlation (orange)

Fig.2.2

Fig.2.1

In summary, there is a moderate positive correlation between the exchange rate and the export
quantity. This correlation is more visible in Fig.1 than it is in Fig.2. There are areas in Fig.1 that contradict
the correlation coefficient, but they are a result of economic crises. We have also found that the
standard deviations and variance coefficients of both the exchange rates and exports are increasing with
time. This is due to the increasing size of economy. The mean number of exports are much larger than
the mean exchange rates, hence the standard deviations and coefficients of variation are much larger.
Question 2.d:

The statistical data shows that the mean income of men is approximately $16800 higher than
the mean income of women. In other words, on average, a man would earn 30% more than a woman
according to the statistics computed using the given data set. The median in this case, closely reflects
the average income of men and women and strays little from the mean. The mode, however, is of little
importance as it is skewed by there being a few male and female earners with the same relatively high
income. Although the mean income varies only by approximately 30% between men and women, the
range of incomes for these two groups vary by upwards of 450%. This means that the gap between the
highest earning man and lowest earning man is much larger than the gap between their female
counterparts. This implies two things:

1. The income of men is more variable than the income of women.

2. The highest earning men earn much more than the highest earning women.

Both of these statements are shown to be true by the data set values and the computations of the
measures of dispersion. The standard deviation is an example of one such measure of dispersion. As we
know, the standard deviation measures the square root of the variance. In general, it measures how
much on average a person’s income varies from the mean. The standard deviation of income for men is
300% higher for men than it is for women. Since the value of standard deviation is much greater for
men, we can confirm that the income of men is more variable in comparison to the income of women.
Similarly, the mean absolute deviation is higher for the group of male earners than female. The mean
absolute deviation is a similar measure and the fact that it is higher for men can be interpreted in the
same way as it was interpreted for standard deviation.

The reason the standard deviation is so high is because it is skewed by the few high-income men.
For example, the highest earner for the men deviates from the mean by 1700%. This individual alone
can skew the standard deviation heavily. Similarly, if we look at this same calculation for the women, the
highest earner deviates only 465%. Although this is quite a deviation, it is not going to alter the standard
deviation by nearly as much as the highest earning man. Hence, the results we obtained for the standard
deviation and mean absolute deviation for men and women differ so much, because of the difference in
the ability of the highest earners of each respective gender to skew the measures of dispersion. If the
MAD and SD were not enough evidence, the coefficient of variance also tells the same story. The CV is
simply the ratio between the SD and the mean income. The reason it is so much greater for men than it
is for women is because the standard deviation is so skewed by the extremely high-income earning men,
hence driving the ratio upwards. This skewing effect is not nearly as potent on the side of the women.

The frequency distribution chart tells us that, 37% of women earn only 57% of the mean income.
Similarly, 33% of men earn only 44% of the mean income for men. Keep in mind the fact that the mean
income for men is much higher than the mean income for women. As a result, 44% of the mean male
income is higher than 57% of the female mean income. There are more women in the lowest income
bracket than there are men. The frequency distribution also states that there are more men in the
higher income brackets than there are females. This is clearly visible upon comparison of the histograms
for male and female income. With the exception of one high income bracket, there are more men than
women in all high-income brackets. In fact, there are three men that earn so much that they are not in
any income bracket.
 In summary, it is clear that on average, men earn more than women. The statistics also make a case
for the income of men being much more volatile than it is for women. Every measure of dispersion is
much higher for men than for women. This confirms that the highest earning men heavily out earn the
highest earning women. The frequency distributions confirm that there are more low earning women
than there are low earning men. In addition to this fact, there are more high earning men than there are
high earning women. These are all the statistical findings that are immediately true from direct
interpretation.

We conclude with a few questions that can help pinpoint the cause of the income disparity that we
notice between men and women.

There are many career pathways that one can choose from. Each career path has a different mean
income. What is the ratio of women who pursue lower income careers compared to men? If this ratio is
high, why is it that women pursue these pathways more frequently than men?

Some women who work in certain positions earn less than men in a similar position. Is the cause
systemic (unfairness to women / bias towards men)? If it is systemic, does the system dissuade women
from attempting to reach high income positions?

The data set shows that there are men who earn so much that they are not even within the highest
income interval. Why are the highest earning men so much richer than the highest earning women?

These are important questions that when answered tell us why the disparity exists.