What role do the intensive and extensive margins of capital and labor play in macroeconomic fluctuations? To answer this question, we construct a real business cycle model that considers both intensive and extensive margins of capital and labor. While the importance of these two margins in terms of the aggregate economy is recognized, the treatment of these margins in much of the literature is insufficient. We estimated our model using Japanese data to obtain the impulse response functions and variance decomposition. We find that in response to a positive productivity shock, firms increase their effective capital by increasing their capital utilization rate and their physical investment, while they adjust their total hours worked by changing working hours rather than the number of employees. Additionally, we find that the capital depreciation and labor supply shocks, which are the main drivers of the capital utilization rate and working hours, have a significant influence on output fluctuations. Our results indicate the importance of considering adjustments along the intensive and extensive margins when we discuss the effect of a temporary reduction in corporate income tax rate.