Can anyone help?
Prob (GDP increase) =0.1
Prob (inflation increase)=0.2
the probability of increase in inflation, given an increase in GPD has occured, is 60% (.6).
Q: what is the probably of an increase in GDP and inflation?
if I recall, the possible choices were:
a) .12
b) .18
c) .06
C
B = GDP
A= Inflation
P(A|B) = 0.6 A given B
Now think B has a prob of 10%. By chance we “roll” B, now the chance to also hit A next is 60%. To hit both together is 0.1 x 0.6 = 0.06
Formula
P(A|B)= P(A and B) / P(B) or P( A and B) = P(A|B) * P(B)
thanks…had a brain freeze moment there