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by padobson
3220 days ago
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It's more like investment vs. consumption. Keynesians would say the government should employ policies to increase overall consumption in the economy (aggregate demand). Austians would say government shouldn't do either, but rather allow the free market to find the correct balance between consumption and investment. They are particularly against monetary policy because it increases overall investment in an economy (aggregate supply). The problem is that artificially high rates of investment inevitably lead to businesses offering goods and services that cannot be sold profitably (malinvestment). That's why Austrians believe that artificially low interest rates cause business cycles. |
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