Consider an economy in which the aggregate production function is given by the equation: Y = 3.6 K0.5 N0.5 where (Y) is aggregate production, (A) measures productivity, (K) is the stock of physical capital and (N) is the amount of labor, measured in millions of workers. Both Y and K are measured in billions of reais. K is given and is 10,000 (i.e., 10,000 billion reais), so K0.5 = 100. The aggregate labor supply is given by the following equation: NS = [(1-t).w]2 where (t) is the income tax rate on labor and (w) is the real wage, measured in reais per hour. t = 0.20 (20%). The equilibrium levels of the real wage (w) and employment (N) are, respectively, [ANSWER] and [ANSWER]. The full employment production level (Y) is [ANSWER]. Finally, the after-tax real wage that workers receive per hour in this economy i
Consider an economy in which the aggregate production function is given by the equation:
Y = 3.6 K0.5 N0.5
where (Y) is aggregate production, (A) measures productivity, (K) is the stock of physical capital and (N) is the amount of labor, measured in millions of workers. Both Y and K are measured in billions of reais. K is given and is 10,000 (i.e., 10,000 billion reais), so K0.5 = 100.
The
NS = [(1-t).w]2
where (t) is the income tax rate on labor and (w) is the real wage, measured in reais per hour. t = 0.20 (20%).
The equilibrium levels of the real wage (w) and employment (N) are, respectively, [ANSWER] and [ANSWER].
The full employment production level (Y) is [ANSWER]. Finally, the after-tax real wage that workers receive per hour in this economy i
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