Question: At the Stock and Watson (http://www.pearsonhighered.com/stock_watson) website go to Student Resources and select the option "Datasets for Replicating Empirical Results." Then select the chapter 8 CPS data set (ch8_cps.xls) into a spreadsheet program such as Excel. For the exercise, use the first 500 observations only. Using data for average hourly earnings only (ahe) and years of education (yrseduc), produce a scatterplot with earnings on the vertical axis and education level on the horizontal axis. What kind of relationship does the scatterplot suggest? Confirm your impression by adding a linear trendline. Find the correlation coefficient between the two and interpret it.

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