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Suppose that the corporate tax rate goes up and this results in firms investing in less capital so that capital (K) falls to 8 (from
Suppose that the corporate tax rate goes up and this results in firms investing in less capital so that capital (K) falls to 8 (from 9). In addition, the open borders down south increase labor supply so that labor supply is now: NS = 5 + w
Find the equilibrium real wage rate, the full employment level of employment, and the full-employment level of output for this economy and label on your diagrams as point B.
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