Practice question · True or false
The Central Limit Theorem explains why sums of many effects are normal, which is why income and city sizes are normal too.
Hints
- Are those quantities sums, or products?
- Multiplicative growth gives a different distribution.
Show the answer
False
Why
False. The CLT applies to sums of comparable independent effects. Income and city size grow multiplicatively, proportional increases compounding, which produces a log-normal distribution with a long right tail, not a normal one. The mechanism decides the distribution, not the number of factors.
Practise The Normal Distribution
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