1. Suppose the supply of labor increases. Draw a graph to show how potential output and wages change. 2. Draw a graph to show how potential output and wages change when the stock of capital decreases....

1. Suppose the supply of labor increases. Draw a graph to show how potential output and wages change.

2. Draw a graph to show how potential output and wages change when the stock of capital decreases.

3. Full-employment output is the level of output that is produced when the labor market is in equilibrium. __________ (True/False)

4. The level of full-employment output in an economy increases as the supply of labor __________ (increases/ decreases), the stock of capital __________ (increases/ decreases), and the natural rate of unemployment __________ (increases/decreases).