The RBC model tells us that
A)as the real wage rate rises,the amount of labor supplied and thus output produced falls.
B)as the price level rises,the real wage rises,thus raising the amounts of labor supplied and output produced.
C)as the real interest rate rises,the amount of labor supplied and thus output produced rises.
D)as the price level rises above the expected price level,actual output rises above the natural real GDP.

Question

Quizplus · Accepted Answer

In the Real Business Cycle (RBC) model, a rise in the real interest rate increases the incentive to work more, thus increasing labor supply and output.

The RBC Model Tells Us That