According to real business cycle theory, workers' decisions to work now versus later depend on
A)the real wage rate today but not the real wage rate in the future.
B)the money wage rate.
C)the real interest rate.
D)labour productivity.
E)none of the above

Question

Quizplus · Accepted Answer

According to real business cycle theory, workers base their decisions to work now versus later on the real interest rate, which represents the opportunity cost of not consuming now. A higher real interest rate incentivizes individuals to work more now and consume less, increasing savings for future consumption.

According to Real Business Cycle Theory, Workers' Decisions to Work