According to the real business cycle theory, an increase in an input price, such as oil, will

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Real business cycle theory suggests that an increase in input prices, such as oil, will result in a decrease in real GDP due to increased production costs. This increase in production costs will result in businesses supplying fewer goods and services, leading to a decrease in real GDP. At the same time, the increased cost of production will likely lead to higher prices for goods and services, resulting in an increase in the price level. Therefore, an increase in an input price such as oil will decrease real GDP but increase the price level, as stated in option C.

According to the Real Business Cycle Theory, an Increase in an Input