A. Use theLabor Market diagramto show the impact that this shock has on the equilibrium employment (labor, N) and equilibrium real wage (w).Then use theproduction functionto illustrate graphically the impact on the full-potential (i.e. on Y_bar).Label everything.

B. Provide complete/detailedintuitive discussion of the impact on the economy; discuss impact on the labor market and the production function (including Y_bar), elaborating on why the changes you show occur.(make sure to discuss why w, N and Y change providing economic reasoning).