Question 4 (Answer in 200-400 words in total) Draw a labour market diagram that represents the supply and demand of labour and explain why one of the curves is upward sloping and one downward sloping. On this graph, represent a labour shortage and explain the relationship between a labour shortage and the level of wage paid by firms. What employment policy would you recommend to reduce the labour shortage? (10 marks) Question 5 (Answer in 200-400 words in total, provide all details of your calculation) Consider an economy where we only consume computers and petrol as indicated on the table below: Product Quantity in 2021 Price in 2021 Quantity in 2022 Price in 2022 Computers 2 6 2 7 Petrol 3 5 5 8 Using 2021 as the base year answer the following questions, showing your calculations: a. Briefly describe the steps in the process of measuring the price level in Australia. (2 marks) b. Calculate the nominal GDP in 2022 and the real GDP in 2022? Would either of these values differ if 2022 was used as a base year instead of 2021. (4 marks) c. Explain what the GDP deflator measures. Calculate the GDP deflator in 2022 and 2021. (4 marks)
