When Taxes Are Included in the Stylized DSGE Model, with Cobb-Douglas

question 84

Multiple Choice

When taxes are included in the stylized DSGE model, with Cobb-Douglas production, labor demand is given by:

• A) \(w = \bar { \ell } \cdot \frac { ( 1 - \tau ) w } { c }\)
• B) \(\Delta L = \bar { s } f ( K , L ) - \bar { n } L\)
• C) \(w = \pi ^ { e } + \bar { v } \tilde { Y } + \overline { \bar { a } }\)
• D) \(w = \bar { m } ( \pi - \bar { \pi } )\)
• E) \(w = ( 1 - \tau ) \cdot 2 / 3 \cdot \frac { \bar { A } K ^ { 1 / 3 } } { L ^ { 1 / 3 } }\)

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Definitions:

Sale of Land

A financial transaction involving the transfer of ownership of real estate property from one party to another.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset, reducing its original cost to its current book value over time.

Indirect Method

A cash flow statement approach that starts with net income and adjusts for changes in balance sheet accounts to reconcile to cash generated by operating activities.

Net Income

The net earnings of a business once all costs, taxes, and interest payments are subtracted from its overall income.