An increase in the real interest rate
A) reduces savings
B) shifts the current labour supply curve to the right.
C) shifts the current labour supply curve to the left.
D) reduces the real wage.
E) reduces the labour supply.

Question

Quizplus · Accepted Answer

An increase in the real interest rate makes saving more attractive, leading individuals to work more to take advantage of higher returns on savings, thus shifting the current labour supply curve to the right.

An Increase in the Real Interest Rate