7. Use the classical model of factor markets (Mankiw, chapter 3 ) to predict how each of the following shocks should affect real wages (W/P) and the real rental price of capital (R/P). Be sure in each case to clearly state your predicted direction of change (up, down, or no change) for both variables and depict your predictions with supply/demand diagrams for both the labor and capital markets. a. The size of the labor force shrinks ( l5 decreases) b.Technological innovation increases total factor productivity (A increases) c. The economy's stock of capital increases ( K K increases) d. Infiation causes all nominal prices (R, W, and P ) to double.