According to real business cycle theory,a likely cause of an increase in employment is ________.
A)an increase in the real wage
B)an increase in aggregate demand
C)a decrease in the real wage
D)a decrease in the real interest rate

Question

Quizplus · Accepted Answer

Real business cycle theory suggests that employment increases when the real wage increases, as higher real wages make work more attractive relative to leisure, leading to an increase in labor supply.

According to Real Business Cycle Theory,a Likely Cause of an Increase