In the real business cycle,
A)employment, labour productivity and real wages are procyclical.
B)employment, labour productivity and real wages are countercyclical.
C)employment, inflation are procyclical, but real wages are countercyclical.
D)unemployment, labour productivity and real wages are procyclical.

Question

Quizplus · Accepted Answer

In the real business cycle, employment, labour productivity, and real wages all tend to move in the same direction as the business cycle. This means that they are all procyclical, meaning they increase during economic expansions and decrease during economic contractions. This is due to the fact that real business cycle theory suggests that economic fluctuations are driven by changes in technology and productivity shocks.

In the Real Business Cycle