L Consider the following diagram I) 2' 3 N? N? E 8 E D U l 3 N - Current Employment The current labor demand NCl is function of the wage: the higher the wage, the c labor demand. The labor supply NCI is also dependent on 2 (the technology level) and K (the level of current capital): if either of them increases, Nd shifts to the c 2 _Consider the following diagram E \"'03 w- (maul N - Current Labor Supply The current labor supply N5 is G function of the wage: this means that the income effect is O than the substitution effect. The labor supply N5 is also 0 function of the real interest rate 1'. this means that if rgrows, the labor supply curve shifts to the 0