According to trade cycle is a purely monetary phenomenon.
Options
AKeynes
BHawtrey
CPigou
DSchumpeter
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Business CyclesPYQ - Dec 2020Question 95 of 20
All Questions Correct Answer
✅ Option b — Hawtrey
All Options:
- AKeynes
- BHawtrey
- CPigou
- DSchumpeter
Detailed Solution & Explanation
To determine who considers the trade cycle as a purely monetary phenomenon, we need to look at the views of different economists.
• The trade cycle, also known as the business cycle, refers to the fluctuations in economic activity over time, with periods of expansion and contraction.
• Hawtrey's theory of the trade cycle emphasizes the role of money and credit in causing these fluctuations, suggesting that changes in the money supply and interest rates drive the cycle.
• This perspective aligns with the idea that the trade cycle is a purely monetary phenomenon, as it focuses on the monetary factors that influence economic activity.
• In contrast, other economists like Keynes and Schumpeter have more complex views of the trade cycle, incorporating factors such as aggregate demand, investment, and innovation, which go beyond purely monetary factors.
• For example, Keynes' view of the trade cycle emphasizes the role of aggregate demand and psychological factors, making it a more multifaceted explanation than a purely monetary one.
• Therefore, Hawtrey's emphasis on monetary factors makes his theory the most closely aligned with the idea that the trade cycle is a purely monetary phenomenon.
About This Chapter: Business Cycles
Paper
Paper 4: Business Economics
Weightage
5%
Key Topics
Phases, Features, Causes
Business Cycles describe the recurring fluctuations in economic activity — Expansion, Peak, Recession, and Trough. This chapter covers the phases, features, and causes of business cycles, along with theories explaining why economies go through regular boom-bust patterns.
View Official ICAI SyllabusExam Strategy Tip
This is a lower-weightage chapter but easy to score. Focus on memorizing the four phases and their characteristics. Questions are usually straightforward.
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