This assignment will introduce you to another school of thought within economics: The Austrian School. The Austrian economists have different ideas about how the economy functions than mainstream classical or Keynesian economists. One important difference in these theories is on business cycles. For this assignment, I want you to first watch these short videos to understand the basics of the Austrian Business Cycle (about 20 minutes in total time):

All of the videos are on youtube.

Austrian Business Cycle Theory | What causes business cycles?

The Austrian Theory of the Business Cycle - Austrian Economics with Steve Horwitz

Business Cycles Explained: Austrian Theory

After watching these videos, you will then answer the following questions:

1) What is the basic structure of the Austrian Business Cycle (i.e. what causes the business cycle, what happens during the business cycle, and what are the results)?

2) Why is the Market For Loanable Funds that we studied earlier in our class important for understanding the Austrian Business Cycle theory?

2) How can the Austrian Business Cycle be used to explain the Great Recession of 2008 and the crash of the housing market?

3) What are some criticisms of the Austrian Business Cycle theory?