Suppose the labor market is initially at its equilibrium, i.e., labor supplied equals labor demanded. Explain and show graphically the effects of an increase in the economy’s capital stock. Please draw the full graph and provide a detailed explanation of the effect. Label the axes and explain why either the labor demand curve or the labor supply curve shifts.
1. Suppose the labor market is initially at its equilibrium, i.e., labor supplied equals labor demanded. Explain and show graphically the effects of an increase in the economy’s capital stock.
Please draw the full graph and provide a detailed explanation of the effect. Label the axes and explain why either the labor
2. Suppose the goods market is initially at its equilibrium, i.e., the desired level of national saving equals the desired level of investment. Explain and show graphically how an increase of the effective tax rate on capital goods affects the goods
Please draw the full graph and provide a detailed explanation of the effect. Label the axes and explain why either the saving curve or the investment curve shifts.
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In the free labor market, the equilibrium wage rate is determined by the intersection of the labor demand curve and labor supply curve.
Labor demand curve is downward sloping curve indicating an inverse relationship between wages and labor demanded, other things being constant.
Labor supply curve is the upward sloping line indicating positive relationship between wages and labor supplied, other things being constant.
The government can interfere in the free labor market by imposing minimum wage law.
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