The Bureau of Labor Statistics monitors characteristics of the United States economy. Several of these time series are in the data table for this question. These time series are quarterly and span the time period from 1980 through the third quarter of 2011. For example, the bureau monitors compensation and output in the business sector. The variable Compensation is an index of the hourly pay of all persons in the business sector. The variable Output is an index of the hourly output.
(a) A timeplot is another name for a scatterplot of a sequence of values versus a variable that measures the passage of time. Generate timeplots of Compensation and Output. Do these variables seem associated?
(b) Make a scatterplot of Output versus Compensation. Does this plot suggest that the two series are associated? What does the white space rule suggest about this plot?
(c) Find the correlation between Output and Compensation.
(d) Does the correlation between Output and Compensation prove that managers can get more output by increasing the pay to their employees?