Output supply is increasing in the interest rate because
A) labor demand is increasing in the interest rate.
B) labor demand is decreasing in the interest rate.
C) labor supply is increasing in the interest rate.
D) labor supply is decreasing in the interest rate.

Question

Quizplus · Accepted Answer

Increasing interest rates tend to attract more people to save their money rather than spend or invest it, resulting in an increase in the supply of available labor. This leads to an increase in competition among workers, which usually results in lower wages and higher productivity, ultimately increasing output supply.

Output Supply Is Increasing in the Interest Rate Because