Austrian Business Cycle Theory, Federal Reserve Bank, Economic Dangers and You.

There is never really a simple answer when explaining the Austrian Business Cycle (ABC) Theory, because of the multiple factors that are involved. The theory is  based on the symbiotic relationship between businesses, consumers and banks with interest rates playing an important role in that relationship. For example, during economic lows, high interest rates is what drives consumers to save and businesses to invest. Consumers benefit from high interest rates because of the higher returns on their savings, which incentivizes the consumer to keep their money in savings rather than spending on non-essential items.

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