Which term refers to the concept where one event directly causes another event?

Causation refers to the relationship between events where one event directly leads to the occurrence of another. In economics, understanding causal relationships is crucial because it helps to determine how changes in one factor, such as consumer demand or government policy, will lead to changes in another factor, like overall economic output or employment levels. When we establish causation, we can make predictions about the effect of certain actions or events, as we are confident that a change in the cause will result in a change in the effect.

On the other hand, correlation refers to a relationship where two events occur together, but one does not necessarily cause the other. Association implies a connection between two variables but does not indicate that one causes the other. Imitation, meanwhile, involves copying behaviors or practices and does not pertain to the cause-and-effect relationship being evaluated in this context. The clear distinction of causation from these other terms is fundamental in macroeconomic analysis as it influences policy-making and economic forecasting.