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Consider the Real Business Cycle Model studied in class. The equilibrium effects of a future increase...

Consider the Real Business Cycle Model studied in class. The equilibrium effects of a future increase in total factor productivity (z' using the notation in class) include:

a).an increase in the real wage and an increase in the real interest rate.

b).an increase in the real wage and a decrease in the real interest rate.

c).a decrease in the real wage and an increase in the real interest rate.

d).a decrease in the real wage and a decrease in the real interest rate.
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The correct option is c).a decrease in the real wage and an increase in the real interest rate..

Consider the Real Business Cycle Model studied in class. The equilibrium effects of a future increase in total factor productivity (z' using the notation in class) include: c).a decrease in the real wage and an increase in the real interest rate.

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