In year 2019 (initial equilibrium), the economy's parameter values were A=500, K=600 and L=300? Compute the equilibrium wage and household income. Pick the correct statement below.

Household income will be roughly equal to 708.

Household income will be roughly equal to 488.

Household income will be roughly equal to 354.

Household income will be roughly equal to 250.

In year 2020 (final equilibrium), the government shuts down in-person schools and all children have to stay home and switch to remote learning. As a result, one parent in each household with young children quits the labor force to care for his/her children. Suppose that the economy's parameter values are now A=500, K=600 and L=250. Compute the equilibrium wage and pick the correct statement below.

Household income will be roughly equal to 262.

Household income will be roughly equal to 554.

Household income will be roughly equal to 775.

Household income will be roughly equal to 278.

What is the change in overall GDP between the two years?

An 8% increase.

A 5% reduction.

An 8% reduction.

A 5% increase.

Draw diagram for the labor market. Depict the initial equilibrium as point A and the final equilibrium as point B. Make sure you label the curves and axes carefully. Which of the statements below is correct?

The labor supply will shift to the left and the demand will stay the same.

Both the demand and the supply will shift to the right.

Both the supply and the demand will shift to the left.

The labor demand will shift to the left and the supply will stay the same.

Please Draw the diagrams corresponding to the questions in this section. Make sure you label equilibrium points A (year 2019) and B (year 2020). Include also a short written description.