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Austrian Model definitions

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  • Austrian Model
    Economic framework favoring free markets, explaining cycles of expansion and recession driven by monetary policy and interest rates.
  • Business Cycle
    Pattern of economic expansions and recessions, influenced by investment and monetary conditions, central to Austrian economic theory.
  • Expansion
    Phase of increased economic activity, often triggered by low borrowing costs and rising investment, preceding a peak.
  • Recession
    Period of declining economic output, typically following excessive investment and a market peak, deepened by low interest rates.
  • Interest Rate
    Cost of borrowing money, set by central banks, which influences investment levels and the severity of economic cycles.
  • Investment
    Allocation of resources to productive assets, stimulated by low borrowing costs, sometimes leading to unsustainable growth.
  • Free Market
    Economic system with minimal government intervention, where prices and production are determined by supply and demand.
  • Central Bank
    Institution managing monetary policy, including setting borrowing costs, which impacts economic cycles and market stability.
  • Monetary Policy
    Actions by financial authorities to control money supply and borrowing costs, affecting investment and economic fluctuations.
  • Market Equilibrium
    State where supply and demand balance, influenced by monetary conditions and investment decisions in Austrian theory.
  • Housing Bubble
    Rapid increase in real estate prices fueled by excessive investment, often ending in a sharp market decline.
  • Great Recession
    Major economic downturn from 2007-2009, exemplifying Austrian theory with its roots in low borrowing costs and housing investment.
  • Classical Model
    Economic approach advocating minimal government intervention, similar to Austrian principles but predating its business cycle focus.
  • Government Intervention
    Actions by authorities to influence economic outcomes, contrasted with Austrian preference for market-driven solutions.
  • Peak
    Highest point in economic activity during a cycle, after which a downturn or recession typically follows.