According to the Austrian view of the business cycle, if expansionary monetary policy pushes the interest rate to an artificially low level, the result will be
A)a long-term increase in output and employment.
B)malinvestment and an unsustainable economic boom, followed by a recession.
C)an increase in demand stimulus, that will expand employment and lead to a rapid increase in long-term economic growth.
D)a temporary increase in the inflation rate, followed by a sustainable expansion in output and employment.

Question

Quizplus · Accepted Answer

The Austrian view suggests that artificially low interest rates lead to malinvestment, causing an unsustainable boom that eventually results in a recession.

According to the Austrian View of the Business Cycle, If