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- What is the equilibrium wage rate? what is the equilibrium level of employment?Asthebabyboomergenerationretires,whatshould happen to wages and employment? Can you show this graphically?The United States has established a progressive income tax system, where a worker’s tax rate onearnings increases as she earns more money. There are 168 hours in a given week. Assume thatfor the first 56 hours worked, the tax rate is t1, which means that the net real wage is w*(1-t1).After working the 56th hour, the worker jumps to a higher tax rate t2. After the 112th hourworked, the individual jumps to an even higher tax rate, t3.(a) During most election years, some politicians argue that a having a flat tax system isbetter. Assume that there is a proposal to institute a flat tax, where all workers pay a taxrate equal to t4, which is greater than t3. On the same set of axes, graph the budgetconstraints associated with the progressive tax system and the flat tax system. Make sureto label all of the slopes.(b) Would moving to this proposed flat tax system likely encourage more or fewer hoursworked for relatively high-wage workers? Make sure to explain your answer (a writtenexplanation…
- Illustrate and explain the impact of a minium wage on the labour marketWhy does substitution bias arise if we calculate the inflation rate based on a fixed basket of goods?As the baby boom generation retires, the ratio of retirees to workers will increase noticeably. How will this affect the Social Security program? How will this affect the standard of living of the average American?
- Evaluate as accurately as you can how each of the following individuals would be affected by unanticipated inflflation of 10 percent per year:a. A pensioned railroad worker.b. A department-store clerk.c. A unionized automobile assembly-line worker.d. A heavily indebted farmer.e. A retired business executive whose current income comes entirely from interest on government bonds.f. The owner of an independent small-town department store.State the three main components of the domestic factor income. FastAssume you are an economist at Ministry of Economy. During the budget consultations, a participant suggested that the government should consider using income tax as a tool for improving productivity. The Principal Economic Planning Officer has directed you to provide him with the analysis of the impact of income tax changes on labour market. Using relevant diagram(s) illustrate and discuss the implications of changes in the income tax on labour market.