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Quiz
Related Lesson
Game of Theories: The Austrians
Knowledge Check
Knowledge Check
Question 1 of 4
According to the Austrian theory of business cycles, how does the central bank distort price signals?
a.
By increasing velocity, the central bank creates the illusion of greater consumer demand for short-term goods.
b.
By increasing velocity, the central bank creates the illusion of lower consumer demand for investment goods.
c.
By increasing inflation, the central bank causes interest rates to fall, falsely signaling an increase in consumer savings.
d.
By increasing inflation, the central bank causes interest rates to rise, falsely signaling a decrease in consumer savings.
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Related Courses
Course
Principles of Macroeconomics
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