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Austrian Model definitions

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  • Austrian Model
    An early economic framework favoring free markets over government planning, emphasizing cycles driven by central bank policies.
  • Free Market System
    An economic environment where prices and production are determined by voluntary exchanges with minimal government intervention.
  • Government Planning
    A system where authorities direct economic activity, including production and investment decisions, rather than relying on market forces.
  • Business Cycle
    A recurring pattern of economic expansions and recessions, marked by fluctuations in output and employment.
  • Expansion
    A phase in the economy characterized by rising output, investment, and employment, typically following a recession.
  • Recession
    A period of economic decline marked by reduced investment, output, and employment, often following an expansion.
  • Central Bank
    An institution responsible for managing a nation's monetary policy, including setting interest rates that influence economic activity.
  • Interest Rate
    The cost of borrowing money, set by monetary authorities, which affects investment and consumption decisions.
  • Investment
    The allocation of resources by firms or individuals to acquire assets or capital goods, aiming to generate future returns.
  • Production
    The process of creating goods or services, often increased during economic expansions due to higher investment.
  • Housing Market
    A sector where residential properties are bought and sold, sensitive to changes in borrowing costs and investment trends.
  • Bubble
    A rapid escalation in asset prices, such as real estate, driven by excessive investment and often followed by a sharp decline.
  • Great Recession
    A severe global economic downturn from 2007 to 2009, triggered by a collapse in the housing market after a period of low interest rates.
  • Keynesian Model
    A framework emphasizing government intervention to manage economic cycles, contrasting with free-market approaches.