CA Foundation P4 · Chapter 6 · Question 7 of 15
The view that the trade cycle is 'a purely monetary phenomenon' caused by expansion and contraction of bank credit is associated with:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Hawtrey
Explanation
R. G. Hawtrey argued that changes in the flow of money, especially bank credit, cause booms and depressions. When banks expand credit, demand and prices rise; when they contract it, a downturn follows.
More Business Cycles MCQs
- Q9The theory that business cycles result from waves of optimism and pessimism among businessmen is associated with:
- Q10The 'sunspot theory' of business cycles, which linked fluctuations in agricultural output to changes in sunspot activity, was put forward…
- Q11The worldwide economic downturn that began with the stock market crash of 1929 is known as:
- Q12A commonly used rule of thumb defines a recession as:
- Q13To counter a recession, the government is most likely to: