what is the primary driver of business cycles according to monetary theory ?
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Answer:
According to monetary theorists (mainly Hawtrey) the business cycles are purely monetary phenomenon because general demand is itself a monetary phenomenon. Hawtrey advocated that business cycles are the continuous phases of inflation and deflation. According to him, changes in an economy take place due to changes in the flow of money.
Thus, the changes in monetary and credit market conditions is primary driver of business cycles according to monetary theory.
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what is the primary driver of business cycles according to monetary
theory ?
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