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.

Question

Quizplus · Accepted Answer

Hayek and his followers argue that business cycles are caused by excessive credit expansion and artificially low interest rates, which lead to malinvestment and eventually result in economic booms and busts.

According to Friedrich Hayek and His Followers, the Booms and Busts