In the real business cycle framework, a technology shock that increases investment demand and the demand for loanable funds leads to a _ quantity of saving and a _ real interest rate.
A)higher; lower
B)lower; lower
C)lower; higher
D)higher; higher

Question

Quizplus · Accepted Answer

In the real business cycle framework, a technology shock that increases investment demand leads to an increase in the demand for loanable funds. This results in a higher quantity of saving and a higher real interest rate as the supply of savings adjusts to meet the increased demand for investment.

In the Real Business Cycle Framework, a Technology Shock That