The following equations describe planned spending for

Consider the following model for supply and demand of workers (100,000’s) in the aggregate labourmarket, where w is the real hourly wage.

Supply curve:
Demand curve:
(a) Calculate and state the equilibrium real wage and level of employment and illustrate youranswer on a diagram.
(2 marks)
(b) Suppose that the labour force increases by 100,000 (potential) workers and that the real wageremains fixed to its level in part (a). Calculate the levels of employment, unemployment and thelabour force after the change and illustrate your answer on a separate diagram. Explain.(3 marks)
Consider the following model for supply and demand of worker hours (1,000,000’s) in the aggregatelabour market, where w is the real hourly wage.

Supply curve:
Demand curve:
(a) Calculate and state the equilibrium real wage and level of employment and illustrate youranswer on a diagram. Explain.(2 marks)

(b) Suppose a tax of $2 is levied on every hour worked. State the level of employment and the realwage after the imposition of this tax and illustrate your answer on a diagram. Explain who pays thetax.(3 marks)
The country of New West Dubbo is experiencing lower energy costs due to new technology inextracting energy sources such as gas and oil. Use the supply and demand model (and a diagram) ofthe labour market to explain the effect on labour demand and supply and the levels of employmentand unemployment, and the real wage.
(5 marks)
The country of Kingsland is considering the introduction of a compulsory retirement saving scheme.Under this scheme all workers are required to save ten per cent of their annual wages and salariesuntil they retire. Use the supply and demand model (and a diagram) for saving and investment toexplain the likely effects of this scheme on national saving, investment and the real interest rate inNew Holland. Explain the effects on employment of the saving scheme. (You can assume that NewHolland is a closed economy).(5 marks)
The government of Old Flanders is planning to borrow heavily to finance spending on scientificresearch and development, education and defence. Use the supply and demand model (and adiagram) for saving and investment to explain the likely effects of this scheme on national saving,investment and the real interest rate in New Holland when its economy is closed. Explain the effectsof the scheme on employment.(5 marks)

The country of New Holland is experiencing lower energy costs due to new technology in extractingenergy sources such as gas and oil. Use the supply and demand model (and a diagram) for savingand investment to explain the likely effect on national saving, investment and the real interest ratein New Holland when its economy is closed. Explain the effects of the new technology onemployment.(5 marks)
Explain the three different approaches that can be used to calculate GDP. Briefly indicate why allthree approaches should give the same estimate for GDP.(3 marks)
Is GDP a good measure of a country’s economic welfare? Discuss.
(5 marks)
Consider the following National Accounts data for the calendar year 2010.
Private Consumption
1200
Imports
600
Government Purchases
600
Gross Taxation Receipts
800
Exports
500
Government Transfer Payments
300
Beginning-of-year Inventories
200
Net Interest Payments on Government Debt
40
End-of-year Inventories
100
Sales of Existing Houses and Flats
600
Business Fixed Investment
500