a)Describe what is meant by the term ‘efficiency wage’. In your answer be sure to address the rationale underlying the efficiency wage hypothesis.
b)(3 marks) What impact does the payment of an efficiency wage have on an economy’s labour market and what are the implications for employment and unemployment. In addition to your written explanation also use a diagram to illustrate your answer.
1)analyse the effects of the following economic policies in the loanable fund market. Your analysis is in two parts: firstly to show the effects (if any) using the diagram where we have real interest rate on a vertical axis and the quantity of loanable funds on a horizontal axis. For the second part of your analysis please provide a written explanation to identify how any changes from the policies are likely to impact the longer term economic growth capacity of the economy.   
a)(2.5 marks) Start at the initial equilibrium point A in the Figure below where the quantity demanded of loanable funds (IA) equals the quantity supplied of loanable funds (SA). Demonstrate and explain the effect of an increase in government spending for the loanable fund market, ceteris paribus. In your written explanation address the impact of this on the longer term economic growth potential for the economy.
the initial equilibrium point A in the Figure below where the quantity demanded of loanable funds (IA) equals the quantity supplied of loanable funds (SA). Demonstrate and explain the effect of the latest advances in robotic technology that firms wish to implement to facilitate production, for the loanable fund market, ceteris paribus. In your written explanation address the impact of this on the longer term economic growth potential for the economy.

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