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.
A
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A stockholder's investment is usually riskier than a bondholder's
a. True b. False Indicate whether the statement is true or false
Interest payments on home mortgages and home equity loans are tax deductible. This tax deductibility encourages households to
a. shift other forms of debt to their home mortgage. b. increase the equity in their house. c. make larger payments and pay down their mortgage loan more rapidly. d. decrease the overall amount of household debt in relation to household income.