3. [6 points] Analysis: Suppose that congress votes on major deregulation faced by of key US industries [ie. there is fall in regulations]. a. [3 points] Use the model of chapter 3 to discuss intuitively how the decrease in regulations affects production and Labor demand, providing economic reasoning (intuition). Note: simply stating the impact(s) without providing economic reasoning will not yield full points [partial credit will be given]. - the discussion should explain the economic reasons for the movement from one equilibrium to the other (as done in lecture). b. [3 points] Continue with a). Now, use the models of chapter 3, to illustrate the impact of a fall in regulations (i.e. deregulation) graphically on production, full-potential, & the labor market (i.e. the equilibrium real wage and the equilibrium full-employment). Label all axes and all curves using notation used in class and the textbook [for example use N for Labor and Y for output]. 4. [6 points] 1 point per question; covers chapter 4 only. . A fall in current income causes the lifetime resources to As a result, current consumption future consumption and private savings b. A fall in current taxes causes the lifetime resources to As a result, current consumption future consumption and private savings c. The - refers to a desire to have a relatively smooth pattern of consumption over time. d. A rise in interest rate (1) (increases/ decreases - pick one) the opportunity cost of current consumption. e. Consider a consumer that is a borrower. A rise in interest rate (1) (increases/ decreases) current consumption according to the SE, and (increases/decreases) current consumption according to the IE. f. S curve shifts outwards if there is a fall in provide an example as related to the lecture material)