2. Consider Providence, where the current demand for labor is 15,000 workers at a wage of...

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2. Consider Providence, where the current demand for labor is 15,000 workers at a wage of $120 per day. Providence County imposed a business tax (without a corresponding change in public services) in town and this tax reduced the demand for labor by 1,000 workers. The employment multiplier in Providence is assumed to be 1.80. (15) (a) Calculate the direct effect (in the number of workers) and the multiplier effect (in the number of workers) (2) Also, calculate the total labor demand after the business tax. (1) 2. Consider Providence, where the current demand for labor is 15,000 workers at a wage of $120 per day. Providence County imposed a business tax (without a corresponding change in public services) in town and this tax reduced the demand for labor by 1,000 workers. The employment multiplier in Providence is assumed to be 1.80. (15) (a) Calculate the direct effect (in the number of workers) and the multiplier effect (in the number of workers) (2) Also, calculate the total labor demand after the business tax. (1)

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a 1 Direct Effect The direct effect is the initial change in labor demand due to the imposition of t... View the full answer