Question 1:

1. a)Explain how equilibrium wages and employment change in the economy when there is an increase in the number of working-age immigrants. Be clear on the short-run and long-run response.
2. (8 marks)
3. b)Suppose that some of the immigrants set up businesses rather than become employees. Explain how you expect this to affect the wage-setting curve, the price-setting curve and the labour market equilibrium.
4. (12 marks)

c)Answerbriefly,dotheresultsyouhaveobtainedin(a)and(b)suggestthat immigration is good for the economy?

1. (5 marks)