According to the Austrian View of the Business Cycle, Expansionary

question 72

Multiple Choice

According to the Austrian view of the business cycle, expansionary monetary policy that pushes the interest rate to an artificially low level will

• A)lead to an increase in long-term investments like houses and office buildings without generating the savings that will be required for their purchase in the future.
• B)lead to a reduction in long-term investments like houses and office buildings that will quickly throw the economy into a recession.
• C)lead to an increase in long-term investments like houses and office buildings that will enhance the long-term growth of the economy.
• D)lead to a reduction in investment, but there will be no impact on output, employment or the general level of prices.

---

Definitions:

Price

The quantity of cash forecasted, demanded, or paid in return for an item.

Entire Income

The total amount of income received from all sources before any deductions, taxes or expenses are subtracted.

Units

A standard or basic quantity into which an item of supply is divided, issued, or used.

Clothing

Garments and articles worn on the body, typically made from fabric or textiles.