Question 6 (Taxes and the aggregate labour market) We can use the aggregate labour demand and supply model to show the effects of an income tax employment and real wages. (a) Draw a diagram of the aggregate labour market showing the equilibrium real wage and employment in the absence of an income rate. Now suppose the government levies an income tax on workers. For each dollar earned the worker has to pay f cents in taxes (i.e., for any given real wage a worker only gets to keep (1 -f) (W/P), with f(W/P) going to the government (b) Use your diagram to illustrate the effects on real wages and employment of the income tax