Refer to the Baseball 2012 data, which include information on the 2012 Major League Baseball season. The data also include the mean player salary since 1989.
a. Use the year 2000 salary as the base period and 100 as the base value to develop a simple index for the years since 2000. By what percent has the typical salary increased?
b. The Consumer Price Index values for 2001, 2003, 2011, and 2012 are 177.1, 184.0, 224.94, and 229.594, respectively. What are the average player’s real (or deflated) salaries for those years? Describe the trend in the deflated salaries in a few sentences.
Compare these results with your reply in part (a).