When Expansionary Monetary Policy Pushes Real Interest Rates to an Artificial

question 18

Multiple Choice

When expansionary monetary policy pushes real interest rates to an artificial low, the Austrian view of the business cycle predicts this will lead to

• A)an increase in aggregate demand and a lengthy expansion in real output.
• B)a recession, followed by a strong and lengthy expansion in real output.
• C)malinvestment during an economic boom, followed by a recession.
• D)malinvestment during a temporary recession, followed by a strong and lengthy economic boom.

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Definitions:

Increased Income

Refers to a rise in the amount of money received as wages, profits, or other earnings over a certain period of time.

Mental Health

A state of well-being in which an individual realizes their own abilities, can cope with the normal stresses of life, work productively, and is able to make contributions to their community.

American Men

Male individuals of any age who are citizens or residents of the United States.

Marrying Age

The legally or socially sanctioned age at which individuals are considered eligible to enter into a marriage agreement.