Question: A representative household receives utility from consumption c and supplying labor I: u{c,l} =1og c -l- galog i) As usual, I is the share of

A representative household receives utility from consumption c and supplying labor I: u{c,l} =1og c -l- galog i) As usual, I is the share of time that the household spends working. The household owns an exogenouslyr determined amount of capital It, earns the nominal rental rate R on each unit of its capital holdings, earns the nominal wage W on each unit of labor it supplies, and pays the price P per unit of consumption. However, now suppose that the household pays an exogenous tax rate '3' on labor income. The household's budget constraint is therefore: Pc 2 [1 T)Wl-l-Rk Solve the household's utility maximization problem and derive the household's labor supply.I equation that expresses E as a function ofthe real wage W/P, the real rental rate RIP, capital it\

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