A. Consider an individual worker supplying labor. Discuss the impact of a FALL in the real wage on the quantity of labor supplied (by the worker) according to the SE and according to the IE. In each case, describe the mechanism (i.e. the intuition behind each effect as done in ch.3). Only discuss FALL in w. Discuss, provide economic reasoning.

B. What is the impact of a fall in future income on current consumption, future consumption, and private savings? Discuss, provide economic reasoning for the changes. (i.e. explain the mechanism as done in ch.4)