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

question 109

Multiple Choice

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

• A) \(w = ( 1 - \tau ) \cdot 2 / 3 \cdot \frac { \bar { A } K ^ { 1 / 3 } } { L ^ { 1 / 3 } }\)
• B) \(w = \bar { \ell } \cdot \frac { ( 1 - \tau ) w } { c }\)
• C) \(w = ( 1 - \tau ) \cdot 2 / 3\)
• D) \(w = ( 1 - \tau ) \cdot 2 / 3 \cdot L ^ { 1 / 3 }\)
• E) \(w = ( 1 - \tau ) \cdot 1 / 3 \cdot \frac { \bar { A } L ^ { 2 / 3 } } { K ^ { 2 / 3 } }\)

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Definitions:

Downside

The negative aspect or disadvantage of a situation or decision.

Behavior's Consequences

The outcomes or results that follow an individual's actions, which can influence future behavior.

Counter-regulation

A phenomenon in self-regulation where an initial act of self-control impairment leads to further self-control failures in unrelated areas.

"What the Heck"

An idiomatic expression often used to express confusion, surprise, or a decision to engage in behavior despite potential negative consequences.