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Question 25 of 38
Q.

(a) Calculate the Karl Pearson correlation co-efficient for the following data.

Demand of Product X23272829303133353639
Sale of Product Y18222324252628293032

OR

(b) Explain the scope of Public Finance.

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2023Subjective· 5mImportance★★★★★
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(a) The Karl Pearson correlation coefficient works out to r ≈ +0.996, a near-perfect positive correlation. (b) Public finance covers public revenue, public expenditure, public debt, financial administration and economic stabilisation.

(a) Karl Pearson's coefficient of correlation (plain notation, product-moment formula):

Formula: r = [nΣXY − (ΣX)(ΣY)] / √{[nΣX² − (ΣX)²] × [nΣY² − (ΣY)²]}, where n = 10.

Computation table:

XYX²Y²XY
2318529324414
2722729484594
2823784529644
2924841576696
3025900625750
3126961676806
33281089784924
352912258411015
363012969001080
3932152110241248
ΣX = 311ΣY = 257ΣX² = 9875ΣY² = 6763ΣXY = 8171

Step 1 — Numerator: nΣXY − (ΣX)(ΣY) = 10(8171) − (311)(257) = 81710 − 79927 = 1783.

Step 2 — First bracket: nΣX² − (ΣX)² = 10(9875) − (311)² = 98750 − 96721 = 2029.

Step 3 — Second bracket: nΣY² − (ΣY)² = 10(6763) − (257)² = 67630 − 66049 = 1581.

Step 4 — Denominator: √(2029 × 1581) = √3207849 = 1791.05 (approx).

Step 5 — Coefficient: r = 1783 / 1791.05 = 0.9955 ≈ +0.996.

Interpretation: r ≈ +0.996 is very close to +1, so there is a very high (almost perfect) positive correlation between the demand for Product X and the sale of Product Y — the two move up together.

(b) Scope of Public Finance:

  1. Public revenue: the sources and principles of government income — tax revenue (direct and indirect taxes) and non-tax revenue (fees, fines, profits of public enterprises). …

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