Questions on aggregate supply

Aggregate supply

Question 1

Assuming the economy is in an initial equilibrium at X, identify where the new equilibrium will be, if:

1. There is an increase in the number of labour strikes which raises average wages but does not improve productivity.
2. The exchange rate of an economy’s currency depreciates.
3. There is an oil shock which raises oil prices.
4. Labour markets are deregulated to enable greater migration into an economy.