Use the Labor Market diagram to show the impact of a FALL in retirement age on the equilibrium employment (labor, N) and equilibrium real wage (w). Then use the production function to illustrate graphically the impact on the full-potential level of ouput (i.e. on Y_bar). Label everything.

B. [7 points] Provide a complete/detailed intuitive discussion of the impact on the economy using the MODEL of chapter 3; discuss impact on the labor market and the production function (including Y_bar), elaborating on why the changes you show/state occur. Make sure to discuss why w, N and Y change providing economic reasoning to justify your statements; elaborate on your answer as done in lecture.