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Suppose that the substitution effect of an increase in the real wage always dominates the income effect for the representative consumer.Also, assume the economy is
Suppose that the substitution effect of an increase 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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