Question

According to the Austrian business cycle theory which of the following is true about the economy?
a. The fact that there is widespread business failure does not mesh with our understanding of how markets work.
b. The broad disturbance in our economy points to a monetary cause.
c. It is long-term capital investments that suffer the most.
d. All of the above.
e. None of the above.

Answer 1

Answer:

D) All of the above

Explanation:

This theory was created by the Austrian School in order to explain and understand the market growth based on the credit increase proposed by bank institutions (a central bank). In other words, this theory arguments that the economic cycles, especially financial crisis and recession, are caused by the "creation" of the money. How this money will be used and the result of this application is the central concern of this theory.