Suppose That the Business Cycle in Canada Is Best Described

Multiple Choice

Suppose that the business cycle in Canada is best described by RBC theory. An advance in technology increases productivity. The when-to-work decision depends on the real interest rate. The ________ the real interest rate, other things remaining the same, the ________ is the supply of labour today. RBC theorists believe the when-to-work effect is ________.

A) lower; smaller; small
B) higher; smaller; small
C) higher; larger; large
D) lower; larger; large
E) higher; larger; small