Explain and provide examples of how the equilibrium quantity of labour and price (the hourly wage) might alter:A. Should a €1 tax be levied.

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1Illustrate how the equilibrium quantity of labor and price (the hourly wage) would change in the followingsituations:A. If a tax of €1 were imposed. (1 point) B. If a subsidy of €1 were granted. (1 point)C. If a maximum hourly wage of € 4 is set. (1 point)W S€ 6€ 5€ 4€ 3€ 2 D€ 1L2.Calculate the percentage change in (A) nominal GDP and (B) real per capita GDP from one year to the next inthe closed economy that features the output and prices described in the following table.A is worth 1 point. B is worth 2 points.Production sectors Year 1 (population: 10 residents) Year 2 (population 15 residents)Quantity(Q1)Price(P1)Quantity(Q2)Price(P2)Goods 100 2 150 4Services 50 4 40 63.Suppose you have € 100.000 in an EU bank account and consider the following options:• Option A: Place (deposit) the amount today in a special savings account in the said local bank at thecurrent interest rate r = 1% for one year. (Calculating the outcome of Option A: 1 point.)• Option B: Convert the amount into US $ (today’s exchange rate, E, is €1/$1) and transfer and deposit themoney in a USA bank at the going (there) interest rate r* = 5% for one year. Make an agreement (today) toconvert and return a specified amount of US $ to € one year from today based on the forward exchangerate (F) of €1.25/$1. The forward exchange contact can be signed today to eliminate any uncertainty.(Calculating the outcome of Option B: 2 points.)Show which of the two options is more advantageous. (Comparison of two outcomes: 1 point






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