Which economic theory holds that business cycles are caused primarily by changes in the money supply and credit conditions rather than real sector shocks?

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AReal Business Cycle theory
BAustrian Business Cycle theory
CKeynesian demand-pull theory
DSupply-side theory

✓ Correct answer: B. Austrian Business Cycle theory Austrian Business Cycle theory attributes booms and busts to credit expansion by central banks that distort interest rates and lead to malinvestment. Real Business Cycle theory attributes cycles to technology shocks.

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Topic: Economic Factors

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Which economic theory holds that business cycles are caused primarily by changes in the money supply and credit conditions rather than real sector shocks?

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