According to real business cycle theory, workers' decisions to work now versus later depend on
A)labour productivity.
B)the money wage rate.
C)the real wage rate today but not the real wage rate in the future.
D)human capital.
E)the real interest rate.

Question

Quizplus · Accepted Answer

Real business cycle theory suggests that workers' decisions are influenced by the real interest rate, as it affects the opportunity cost of working today versus saving and working later. As the real interest rate increases, the opportunity cost of working today becomes higher, which may lead workers to choose to save and work later instead.

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