According to Friedrich Hayek and his followers, the booms and busts of the business cycle are primarily the result of
a. fluctuations in aggregate demand.
b. the "animal spirits" of private investors.
c. excessive credit expansion and artificially low interest rates that trigger malinvestment.
d. the unwillingness of political decision-makers to follow the advice of macroeconomists who know how to alter fiscal policy in a manner that would virtually eliminate the ups and downs of the business cycle.
C
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A constitutional balanced budget amendment would
A) require a majority vote of Congress to authorize spending increases. B) require that the federal government maintain a balanced operating budget only. C) require that federal expenditures equal revenues (excluding borrowing). D) divide the federal budget into a capital budget and an operating budget.
The quantity theory of money was derived from the quantity equation by asserting that
A) real output was fixed. B) the money supply was fixed. C) the velocity of money was fixed. D) the velocity of money was zero.