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Consider a one-period closed economy, i.e. the consumer lives for one period. He/She supplies labor, earns wage incomes and demands consumption goods. The government needs to finance an exogenous spending via distorting labor tax. That is to say, for each dollar of wage income the consumer earns, he/she needs to pay 7 fraction to the government. T here indicates the tax rate: a policy variable. In addition to the wage income, the consumers are also shareholders of the firms. So, he/she gets constant dividend payment before making decision. 1.1 Solve the consumer's consumption-labor choice problem, taking prices and government poli- cies as given (partial equilibrium). More specifically, consider the following optimization problem: max {e (1 - 1) -7} (1) s.t. c = w(1 -T)l+e (2) where c is the consumption and / denotes the labor service supplied. e is the dividend payment from the firms. (Note: By solving the problem, I mean you should get all equilibrium allocations as functions of parameters: c* (w, T, 7), *(w, T, 7).) 1.2 Suppose the government needs to increase the tax rate to finance a higher level of govern- ment spending. Think about how that affects the equilibrium labor supply *. 1.2.1: If e > 0, what will happen? 1.2.2: If e =0, what will happen? 1.2.3: If e