Given a correlation value of 0.762 between Number of Monthly Credit Card Purchases and Debt-to-Income Ratio, what pattern would you expect?

• A. As purchases rise, debt-to-income ratio falls
• B. No relationship
• C. As purchases rise, debt-to-income ratio rises
• D. As purchases fall, debt-to-income ratio rises

Answer: (C)

A strong positive relationship is being tested here. A correlation of 0.762 means as one variable goes up, the other tends to go up as well, with substantial consistency but not perfect precision. For Number of Monthly Credit Card Purchases and Debt-to-Income Ratio, more purchases generally mean more remaining debt or higher monthly debt payments relative to income, so the debt-to-income ratio tends to rise when purchases increase. This pattern reflects the idea that higher spending on credit cards is associated with tighter debt load relative to earnings. It’s important to remember that correlation doesn’t prove causation, but the observed trend clearly shows that higher purchase activity aligns with a higher DTI.