Determine effect of increase in total factor productivity

Reference no: EM132137775

Question: Suppose that the substitution effect of an increase in the wage is always larger than the income effect. Suppose the economy is on the low tax side of the Laffer curve. Determine the effect of increase in Total Factor Productivity, z, on the Laffer curve, the equilibrium tax rate (assume government spending remains the same), consumption, leisure, labor supply and output.

Reference no: EM132137775

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