Q3 2 Points Grading comment: Consider a one-period, three-sector economy consisting of representative consumers, representative firms, and the government. The only source of government tax revenue is a proportional income tax imposed on consumers. The government is unable to borrow from any source and aims to generate a fixed level of tax revenue to cover its compulsory expenditures. Suppose that the substitution effect of an increase in the real wage is always larger than the income effect for the representative consumer. Also assume that the economy is always in the low-tax-rate equilibrium on the good side of the Laffer curve. Question 3.1 Q3.1 0.5 Points Grading comment: Determine the equilibrium effects of an increase in total factor productivity, zz, on labor supply. Choice 1 of 3:Labor supply increasesChoice 2 of 3:Labor supply decreasesChoice 3 of 3:Labor supply could either increase or decrease