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Suppose that the substitution effect of a decrease in the real wage always dominates the income effect for the representative consumer.Also, assume the economy is
Suppose that the substitution effect of a decrease in the real wage always dominates the income effect for the representative consumer.Also, assume the economy is always in the low-tax-rate equilibrium on the good side of the Laffer Curve.Determine the effects of a decrease in total factor productivity, z, on
a)the Laffer Curve
b)the equilibrium tax rate (t)
c)after-tax wage rate = z(1-t)
d)leisure (l)
e)quantity of labor supply (N)
f)consumption (C)
and output (Y)
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